TREASURY DIRECTIVE: 40-01

Date: September 21, 1992

Sunset Review: TBD

Expiration Date: TBD

SUBJECT: Responsibilities of and to the Inspector General

1. PURPOSE. This directive summarizes the authority of the Inspector General (IG) and the existing reporting and other responsibilities of Department of the Treasury officials and employees to the Office of Inspector General (OIG). This directive describes the following.

Part I - Duties and Responsibilities of and to the IG

Part II - Investigative Policies

Part III - Audit Policies

Part IV - IG Oversight

Part V - Glossary

2. CANCELLATION. Treasury Directive (TD) 40-01, "Responsibilities of and to the Inspector General," dated December 17, 1986, is superseded.

3. AUTHORITIES.

a. Public Law (Pub.L.) 100-504, "The Inspector General Act Amendments of 1988."

b. Treasury Order (TO) 114-01, "Office of Inspector General," dated May 16, 1989.

c. Executive Order (E.O.) 12333, "United States Intelligence Activities," dated December 4, 1981.

d. TD 40-03, "Treasury Audit Recommendation Monitoring System (TARMS)."

4. REFERENCE. TD 27-12, "Organization and Functions of the Office of Inspector General."

5. OFFICE OF PRIMARY INTEREST. Office of Inspector General.

Donald E. Kirkendall

Inspector General

Attachments

1. ORGANIZATION AND MISSION OF THE OIG.

a. Background. The Inspector General is the head of the OIG, a statutorily established office of the Department of the Treasury (hereafter Treasury). The OIG was established by the Inspector General Act Amendments of 1988 (Pub.L. 100-504). TO 114-01 recognizes that establishment and contains Secretarial delegations of authority to the IG. The IG's duties pursuant to the Program Fraud Civil Remedies Act are found in 31 Code of Federal Regulations (CFR) Part 16. The OIG is placed organizationally within the Departmental Offices (DO) but is independent of DO and of all other offices within Treasury. The IG reports to the Secretary through the Deputy Secretary. The organization and functions of the OIG are set forth in TD 27-12.

b. Duties and Responsibilities. The IG is authorized to:

(1) conduct, supervise and coordinate timely and appropriate internal audits and internal investigations relating to the programs and operations of the Treasury including all of its bureaus and offices.

(a) Pursuant to Section 8C(c) of the Inspector General Act of 1978, as amended (hereinafter the Act), this includes conducting internal investigations within the U.S. Customs Service (USCS); the Bureau of Alcohol, Tobacco and Firearms (BATF); and the U.S. Secret Service (USSS); and internal audits and internal investigations within the Internal Revenue Service (IRS), as the IG deems appropriate. For the purpose of this directive, these bureaus shall be known as the "law enforcement bureaus." All other Treasury bureaus are called "non-law enforcement bureaus.")

(b) For the purpose of OIG audits and investigations, all constituent elements of the Legal Division of the Treasury shall be considered part of that bureau (the Legal Division) and not part of any other bureau, except for the appeals function of the IRS, which currently resides in the Office of the National Director of Appeals;

(2) provide leadership and coordinate and recommend policies for Treasury activities designed to:

(a) promote economy, efficiency and effectiveness in the administration of; and

(b) prevent and detect fraud, waste and abuse in Treasury programs and operations;

(3) oversee the internal investigative functions in BATF, USCS, and USSS, and to oversee internal investigative and internal audit functions in IRS;

(4) inform the Secretary, Deputy Secretary, and the Congress fully and currently about any problems and deficiencies relating to the administration of any Treasury program or operation and the need for, and progress of, corrective action;

(5) review and comment on existing and proposed legislation and regulations relating to Treasury programs, operations, and personnel;

(6) report expeditiously to the Attorney General whenever the IG has reasonable grounds to believe there has been a violation of Federal criminal law except as otherwise provided by Section 8C(g) of the Act;

(7) delegate any or all authority under TO 114-01 and/or this directive to another OIG employee, as the IG determines is appropriate;

(8) access returns and return information as defined in Section 6103(b) of the Internal Revenue Code of 1986 in accordance with the provisions of Section 6103 of such Code and the Act, maintain internal controls over such information that meet the requirements of 26 U.S.C. 6103(p)(4), and exercise appropriate controls over any and all classified, sensitive, or otherwise restricted information that is obtained pursuant to the IG's official duties and is in the IG's custody and control;

(9) establish guidelines for determining when it is appropriate to use non-Federal auditors to audit Treasury activities; and

(10) receive and investigate complaints or information from employees, contractors and other individuals concerning the possible existence of criminal or other misconduct constituting a violation of law, rules, or regulations, a cause for suspension or debarment, or mismanagement, gross waste of funds, abuse of authority, or a substantial and specific danger to the public health and safety.

2. DUTIES AND RESPONSIBILITIES OF TREASURY EMPLOYEES.

a. Except as provided in paragraph 2.(b)., all Department of the Treasury officials, officers and employees (hereafter Treasury employees) are required to report promptly to the GIG any information or allegation coming to their attention that indicates that any Treasury employee, former employee, contractor, subcontractor, or potential contractor, may have engaged in an activity referred to in paragraph l.b.(10). Such activities might include:

(1) a criminal or other illegal act;

(2) a violation of the Standards of Conduct or other Federal regulation;

(3) a prohibited personnel practice or violation of merit systems principles; and

(4) any act which creates a specific danger to the public health and safety.

b. An employee of a law enforcement bureau shall report any of the matters in paragraph l.b.(10) to that bureau in accordance with existing bureau requirements. However, if an employee prefers to report a matter to the OIG, the employee may do so. If in doubt whether circumstances warrant referral of a matter to the OIG or other law enforcement office, a Treasury employee should contact the OIG for advice.

c. Matters raising questions of legality or propriety under E.O. 12333 regarding the conduct of United States intelligence activities, and proscribing certain intrusive intelligence gathering methods, shall be reported either to the OIG, to a law enforcement bureau internal affairs or inspection office for reporting to the OIG, or to the General Counsel.

d. All Treasury employees must provide to the IG and to that official's duly authorized representatives full, free and unrestricted access to Treasury activities, property, data, correspondence, records, ADP systems, and any other information that the IG determines is necessary to an audit, investigation, or other official inquiry. In the case of classified documents, OIG employees accessing information shall comply with applicable security rules and regulations. If such records, etc., include material protected by 26 U.S.C. 6103, the OIG shall follow the applicable provisions of Section 8C(e) of the Act.

e. All Treasury employees shall cooperate fully with duly authorized representatives of the OIG by disclosing complete and accurate information pertaining to matters being investigated, audited or reviewed by the OIG. If the employee is the subject of an investigation, the employee will be afforded all required rights.

f. When the Secretary has provided the IG with written notification pursuant to Section 8C of the Act, prohibiting the IG from carrying out or completing any audit or investigation or issuing any subpoena, to prevent the disclosure of sensitive information, a Treasury employee shall withhold that information from the IG.

g. Treasury employees who receive and review OIG audit reports or Reports of Investigation in the course of their official duties shall consult with the OIG prior to releasing or copying any report or portion thereof for the use of any other person, except for those persons with an official need to know. OIG employees in receipt of similar reports from Internal Affairs/Inspection office" shall similarly consult with those offices prior to release or copying, except for those persons with an official need to know.

h. Treasury employees shall maintain in confidence all communications with an authorized representative of the IG when requested to do so, unless required or permitted by law to disclose. Treasury employees shall not discuss any pending OIG investigation with the subject/subjects of the investigation or their representatives without approval of the OIG.

i. Any employee who has authority to take, direct others to take, recommend, or approve any personnel action shall not take or threaten to take any action against any employee as a reprisal for making a complaint or disclosing information to the OIG, unless the complaint was made or the information disclosed with the knowledge that it was false or with willful disregard for its truth or falsity.

j. Treasury employees and others may report suspected fraudulent or wasteful practices in Treasury programs and operations using a toll-free nationwide Hotline number or a local Hotline number listed in the Treasury telephone directory in the section entitled "Services Frequently Requested." The Hotline is staffed Monday through Friday, 9:00 a.m. to 4:00 p.m., eastern time; an after-hours message recording is available. The OIG will not disclose the identity of any employee without the employee's consent, unless the IG determines that such disclosure is unavoidable. The OIG will also make every effort to protect the identity of individuals who are not Treasury employees.

3. DUTIES AND RESPONSIBILITIES OF HEADS OF BUREAUS AND OFFICES.

Heads of Bureaus shall:

a. promptly advise the IG when they become aware of any audit or investigative work being performed or contemplated within their units by or on behalf of an OIG from outside the Treasury. In the case of DO, the Director, Office of Accounting and Internal Controls shall perform this function with respect to General Accounting Office (GAO) audits;

b. ensure that, upon request, OIG auditors and investigators are provided with adequate and appropriate office space, equipment, and other services, pursuant to paragraph 1.C.(2) of TO 114-01;

c. ensure that timely and appropriate responses to OIG audit reports and Reports of Investigation are prepared for and received by the OIG; and

d. assure the widest possible dissemination within their bureaus of the parts of this directive that pertain to employee responsibilities to the OIG. To that end, they may issue further instructions as necessary to implement this directive. All such instructions must be submitted to and approved by the IG prior to issuance.

4. ADDITIONAL DUTIES AND RESPONSIBILITIES OF HEADS OF LAW ENFORCEMENT BUREAUS.

Heads of law enforcement bureaus shall:

a. provide for and maintain effective internal investigative functions within their bureaus; and in the IRS, shall also provide for and maintain an effective internal audit function;

b. ensure that all significant allegations, i.e., allegations concerning senior level employees, flagrant and notorious conduct or that are of Departmental significance received pursuant to paragraph 2.b., are reported immediately to the IG as provided in paragraph 5.b.;

c. with regard to investigative requests from the Office of Special Counsel (OSC), ensure that the following individuals receive and appropriately address such requests: Assistant Director (Internal Affairs), BATF; Assistant Commissioner (Internal Affairs), USCS; Chief Inspector, IRS; and Assistant Director (Inspection), USSS;

d. sign Reports of Investigation conducted pursuant to requests from the OSC, submit the Reports to the IG by the due date assigned, and include in the reports all other information necessary to inform the OSC of the validity of any and all allegations raised (this authority may be redelegated); and


e. consult with the IG before selecting candidates for Senior Executive Service (SES) positions, as designated by the IG in consultation with the bureau head, in the inspection and internal affairs offices; also consult with the Inspector General regarding the annual performance appraisals for officials encumbering these positions.

5. DUTIES AND RESPONSIBILITIES OF HEADS OF INTERNAL AFFAIRS AND INSPECTION OFFICES.

Heads of Internal Affairs and Inspection Offices must:

a. keep the IG fully and currently informed through a monthly report, or more frequently when requested, of significant developments in bureau internal investigative activities (and in the IRS, internal investigative and internal audit activities) in accordance with IG guidance;

b. within 24 hours of receiving any allegation, notify the IG of any such allegation received in their offices which in their view concerns flagrant and notorious conduct or may be of Departmental significance. Allegations involving senior officials as defined herein (see Glossary infra) and allegations or actual violations concerning employees of Internal Affairs and Inspection Offices must be referred immediately to the IG; and

c. detail, on a reimbursable basis, experienced audit (IRS only), investigative, or support personnel as required to the OIG, when in instances of extreme urgency, the IG needs additional personnel in order to carry out that official's duties and responsibilities, and the IG or the IG's designee so requests. Oral requests from the IG or the IG's designee must be confirmed in writing within seven days.

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1. INSPECTOR GENERAL INVESTIGATIVE JURISDICTION AND PROCEDURES.

a. The IG directly conducts, supervises and coordinates all investigations and inquiries of suspected violations of Title 18, United States Code, and other investigations of suspected criminal or other misconduct relating to the programs and operations of the non-law enforcement bureaus of the Treasury. The IG is also authorized to conduct, supervise and/or coordinate investigations or inquiries in the law enforcement bureaus as the IG considers appropriate pursuant to Section 8C© of the Act.

b. The IG also formulates Treasury internal investigative policies and priorities, and monitors and evaluates program performance and adherence to internal investigative principles and policies within the Treasury.

c. When an OIG employee receives an allegation, it should be turned over to the Office of Investigations for analysis. The Office of Investigations shall determine whether the allegation or information shall be:

(1) assigned to an OIG agent for investigation or other disposition;

(2) referred to a law enforcement bureau Internal Affairs or Inspection Office for investigation or other disposition;

(3) referred to another Treasury office for administrative action; or

(4) referred to another agency such as the Department of Justice (DOJ) or OSC.

d. The IG may occasionally refer any investigation or inquiry pursuant to l.a. to a Treasury law enforcement bureau's Internal Affairs or Inspection Office for them to conduct. In those unusual circumstances in which the OIG refers cases to a law enforcement bureau, the referred investigations are directly controlled by the office conducting the investigation. Upon completion of the referred investigation, the Internal Affairs or Inspection Office shall provide a Report of Investigation, with exhibits, to the IG. The OIG may monitor the conduct of such investigations, may require progress reports, and may take over direct control of such referred investigations at any time.

e. It is the policy of the OIG to notify appropriate Treasury and bureau officials of OIG investigations that are being conducted within their areas of responsibility.

f. At the conclusion of an OIG investigation, the OIG will issue a Report of Investigation. In cases involving criminal conduct, the report will be issued to the appropriate U.S. Attorney or to the DOJ. When approved by the U.S. Attorney or DOJ, the OIG will advise the appropriate bureau head with respect to the outcome of the IG's investigation. In cases where there is no evidence of criminal misconduct, or when the U.S. Attorney or DOJ declines the case, the report will usually be issued to the appropriate action official, but no lower than the bureau head, for appropriate action.

g. Pursuant to paragraph 3., the action official in receipt of the OIG Report of Investigation must then report to the OIG on the action taken.

h. When the IG notifies an office or bureau head that the OIG is conducting an investigation of a particular matter within the IG's jurisdiction, no other investigation or similar activity will be initiated or continued regarding that matter by any Treasury office or bureau without the express approval of the IG.

i. Generally, the OIG or a law enforcement bureau Internal Affairs or Inspection Office shall conduct any internal investigation or inquiry concerning alleged criminal or other misconduct. However, other Treasury employees may conduct inquiries in the following circumstances.

(1) When provided for by other law, e.g., an Equal Employment Opportunity investigation, or an investigation ordered by the Secretary for transmission to the OSC.

(2) A minor administrative or management matter.

j. The IG or the Assistant Inspector General for Investigations (AIGI) shall refer any evidence received of a potential criminal violation directly to the Attorney General or to the appropriate U.S. Attorney. In matters involving Chapter 75 of the Internal Revenue Code of 1986, entitled "Crimes, Other Offenses and Forfeitures," the IG shall report only offenses under Section 7214 of such Code regarding offenses by officers and employees of the IRS, unless the Commissioner of Internal Revenue consents to the IG's reporting of those offenses.

k. The OIG shall adequately safeguard all Reports of Investigations. At all times and when not in use, reports shall be stored in locked repositories in accordance with 31 CFR Part 2. Circulation and discussion of the contents of Reports shall be limited to employees with an official need to know.

1. Internal Affairs and Inspection Offices shall refer to the OIG for action and response any inquiries from employees, bureau officials, other Government agencies, the press, and others, including Freedom of Information Act or Privacy Act requests, consistent with 31 CFR Part 1, concerning any investigative activity that has been or is being conducted by the IG.

m. When the IG refers an allegation that falls within the IG's jurisdiction, e.g., allegations involving GS/GM 15's or above, concerning flagrant or notorious conduct, or involving an Internal Affairs or Inspection employee, to the action official of a law enforcement bureau for management action, the allegation should not be investigated by a bureau investigative office. Inquiries should be conducted by the appropriate management action official. If the action official believes that a formal investigation should be conducted by trained criminal investigators, then an appeal should be made to the IG.

2. REPORTS FOR THE OFFICE OF SPECIAL COUNSEL.

a. The IG may investigate or may refer to any Internal Affairs or Inspection Office for investigation, any request received from the OSC that the Secretary refers to the IG.

b. The IG shall prepare for the review and signature of the Deputy Secretary all final Reports of Investigation requested by the OSC. The reports shall be submitted by the IG through the Deputy Secretary to the OSC, and shall conform to the requirements set forth in 5 U.S.C. 1213(d).

c. When the IG receives a request for investigation from the OSC, and the IG refers the matter to a law enforcement bureau's Internal Affairs or Inspection Office, the IG will assign a due date for the submission of a draft report to the IG. Final reports to the OSC will be submitted to the IG for the IG's review and for the signature of the Deputy Secretary.

d. OSC requests for information, as opposed to requests for written reports or requests for investigation, directed to a bureau or office shall be handled directly by the bureau or office receiving the request. A copy of the response to the OSC shall be forwarded to the IG at the same time that it is provided to the OSC.

3. ACTION ON OFFICE OF INSPECTOR GENERAL INVESTIGATIVE REPORTS.

a. Upon completion of an OIG investigation, the IG or the AIGI shall refer any finding of a criminal violation directly to the Attorney General or the appropriate U.S. Attorney. The IG shall advise the bureau head with respect to the conclusion of any such investigation only with the approval of the Attorney General or appropriate U.S. attorney.

b. Upon completion of an OIG investigation, if no criminal misconduct is found, or if criminal misconduct is found but the U.S. Attorney declines to prosecute, the IG or AIGI may submit the Report of Investigation to the bureau head for appropriate action. In the case of investigations of senior officials or notorious conduct, the IG may, at the IG's discretion, submit the report to the Secretary or Deputy Secretary for appropriate action. OIG investigative reports may be referred to management prior to a prosecutorial decision only with the concurrence of the prosecutor.

c. Within 90 calendar days of receipt of a Report of Investigation from the OIG, the action official or that official's supervisor shall submit to the IG, along with the Report of Investigation (all copies) submitted by the IG, a written response detailing the action taken or planned to correct violations and addressing each finding in the Report of Investigation.

d. The IG shall review action officials' responses to IG Reports to determine whether corrective actions taken are generally appropriate to the findings of those Reports. If the IG determines that any particular action is inappropriate, the IG may consult with the office or bureau head to provide any critical comments, state future expectations, and hold bureau officials responsible for future disciplinary action.

e. Action officials and other officials with access to IG Reports of Investigation shall limit access and discussion of the contents to those employees with an official need to know. They shall ensure that IG reports are at all times safeguarded and, when not in use, stored in a locked repository, in accordance with 31 CFR Part 2.

f. If the IG determines that an investigation is appropriate for referral to the General Counsel or designee, pursuant to the Program Fraud Civil Remedies Act, the IG may submit the Report of Investigation to the General Counsel or designee pursuant to 31 CFR Part 16.4.

4. ACTION ON OIG HOTLINE ALLEGATIONS.

a. Upon receipt of a Hotline allegation which merits further evaluation, the Assistant Inspector General for Policy, Planning and Resources (AIGPPR) will make an appropriate referral. If criminal activity or other wrongdoing is alleged, a referral may be made to the appropriate investigative or audit organization. The AIGPPR will follow up periodically to determine the status of actions taken or planned.

b. Non-criminal allegations may be referred by the AIGPPR to Treasury officials for appropriate action. Within 9O calendar days, the action official shall submit a written response to the AIGPPR summarizing any actions taken or planned, and the target dates for actions that have not been completed.

c. The AIGPPR may review action officials' responses and determine whether action taken or planned is appropriate to the findings. If the AIGPPR determines that the action(s) is inappropriate, the AIGPPR may consult with the office or bureau head to provide any comments, state future expectations, and hold bureau or office officials responsible for future actions.

d. The AIGPPR will periodically follow up with management officials to ensure that any necessary corrective actions planned have been completed.

e. Action officials and other management officials with access to Hotline referral information will limit access to and discussion of the contents to those employees with an official need to know. They shall ensure that such information is safeguarded at all times.

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1. INSPECTOR GENERAL AUDIT RESPONSIBILITIES.

a. The OIG provides all direct internal audit services to the Treasury except for the IRS. The OIG oversees internal audit services in the IRS. Nevertheless, the IG may directly audit any program operation administered by the IRS, and may use OIG auditors, or may detail IRS auditors performing such an audit to the OIG, pursuant to the IG Act, TO 114-01, and this directive.

b. The OIG formulates Departmentwide internal audit policies and priorities and ensures that all internal audits performed within the Department, whether performed by Treasury or outside auditors, are in accordance with standards established by the Comptroller General of the United States for audits of Federal entities.

c. The IG distributes final audit reports to all headquarters and field officials responsible for taking corrective action on matters covered by the reports, and to Secretarial officers, bureau heads, and other officials who have an official interest in the subject matter of the report.

d. The IG conducts audits and prepares audit reports on the effectiveness of audit recommendation monitoring systems and conformity with Office of Management and Budget (OMB) Circular A50, Revised, "Audit Followup," and TD 40-03. The IG submits these audit reports to the Assistant Secretary (Management) and appropriate bureau heads and Secretarial officers.

2. ACTION ON OFFICE OF INSPECTOR GENERAL INTERNAL AUDIT REPORTS.

a. The action official will reply to the IG in writing within 30 calendar days of the date the of the draft report, unless otherwise provided in the report transmittal. The reply will describe actions taken and planned, target dates for any incomplete corrective action, and reasons for any disagreement with the draft report.

b. The reply will be incorporated as ' appropriate into the final audit report which will then be distributed to the action official and others who may have an official interest in the subject of the report. If the reply is not received within 30 calendar days and an extension has not been granted, the report may be issued without the reply. Extensions should be requested in writing and should be from the action official to the OIG official who signed the report.

c. Reports on pre-award audits of contract proposals will be issued in final without written responses. Any audit recommendations arising from pre-award audits that relate to procedural issues shall be included in a separate management letter report. When the contract is negotiated, the action official shall prepare and submit a written response to the OIG.

d. Within 30 days after issuance of a final internal audit report containing recommendations and/or findings that have not been agreed to, the action official shall submit a written reply to the Deputy Secretary. This reply shall explain the reasons for the lack of agreement with the recommendations and/or findings contained in the audit report. The action official shall simultaneously submit a copy of the reply to the IG.

e. Resolution shall be made within a maximum of 6 months after issuance of a final audit report in accordance with OMB Circular A-50 and TO 40-03.

f. The OIG will periodically follow up on report recommendations to ensure that corrective actions have been completed and are effective.

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1. GENERAL OVERSIGHT.

a. The IG shall recommend policies for and shall assist management and the Designated Agency Ethics Officer in accordance with 5 CFR 2638.203 to establish and administer a comprehensive integrity program for the Treasury and to maintain standards of honesty and integrity among all Treasury employees and programs.

b. The IG shall prepare a semiannual report to the Secretary, pursuant to Section 5(a) of the Inspector General Act of 1978, as amended, summarizing Inspector General audit and investigative activities within the Treasury.

c. The IG shall review existing and proposed legislation and regulations that could impact on the economy and efficiency of programs and operations within the Treasury. All such proposed legislation and regulations originating in the Treasury or any bureaus shall be provided to the IG by the Office of the Associate General Counsel (Legislation, Litigation and Regulations) or other appropriate office in enough time to enable the OIG to comment. In addition, all Treasury officials shall consider timely OIG comments, if any, prior to approving in final or promulgating any legislative proposal or regulation.

2. INTERNAL INVESTIGATIVE AND INTERNAL AUDIT PROGRAM OVERSIGHT.

a. The IG shall:

(1) develop internal investigative and internal audit policies for all components of the Treasury, and shall monitor and evaluate program performance and adherence of Treasury internal auditors and investigators to internal audit and internal investigative principles and policies;

(2) conduct periodic oversight reviews of the Internal Affairs and Inspection Offices within the law enforcement bureaus. This review function includes:

(a) review of closed and/or open internal audits in the IRS;

(b) in the IRS and the other law enforcement bureaus, review of open and/or closed internal investigations and other inquiries for objectivity and thoroughness;

(c) review of internal audit (in the IRS only) and internal investigative policies, procedures, directives, and manual issuances;

(d) review of effectiveness of organizational structure; and

(e) any other review the IG deems necessary to evaluate the overall effectiveness of the internal audit and internal investigative functions; and

(3) report the results of oversight reviews to the appropriate office or bureau head and the appropriate Secretarial officer, and, if the IG considers the proposed corrective action to be inadequate, so advise the Deputy Secretary.

b. Heads of Bureaus shall:

(1) within 90 calendar days of receipt of the IG's oversight review (see paragraph 2.a)), submit a response to the IG outlining any corrective action taken or planned. Notification of planned corrective action shall include the expected completion date and the name of the official responsible for completing the action. Requests for extensions of time should be submitted to the IG by the head of the bureau or by the appropriate Secretarial officer; and

(2) notify the IG of any proposed changes in staffing, organizational structure, delegation authority, procedures, or other matter which may substantially affect the Internal Affairs or Inspection Offices' authority or ability to function.

c. Internal Affairs and Inspection Office Heads shall:

(1) submit for the IG's review and evaluation all proposed annual office-wide audit (IRS) and annual investigative or integrity plans. Plans must be submitted at a date to be specified by the IG prior to the date of proposed implementation;

(2) report monthly, or more frequently if the IG directs, to the IG the progress of all significant internal audits and internal investigations;

(3) submit to the IG any other reports prepared by their offices concerning office-wide activities and accomplishments;

(4) advise the IG of any significant problems, abuses or deficiencies identified by their offices and the actions taken to correct them;

(5) advise the IG, prior to taking action, of proposed staffing changes in key positions in their offices;

(6) at quarterly intervals, or more frequently if the IG directs, submit to the IG a report on any questions of legality or propriety which have come to their attention pursuant to E.O. 12333;

(7) cooperate with and provide all information requested by the IG for preparation of semiannual reports of internal audit and internal investigative activities in the Department; and

(8) meet with the IG or designee on request to discuss any audit or investigation.

3. NATIONAL SECURITY OVERSIGHT.

a. Pursuant to Section 4 of E.O. 12334, the IG shall prepare quarterly reports for the IG's signature and that of the General Counsel, to the President's Intelligence Oversight Board, concerning any intelligence activities that either official has reason to believe may be unlawful or contrary to E.O. or Presidential directive.

b. At appropriate intervals, the IG shall review Treasury foreign intelligence activities to determine whether such activities raise questions of propriety under E.O. 12333. The IG shall refer any legal questions arising from this review to the General Counsel.

c. Law enforcement bureaus' Internal Affairs and Inspection Offices shall review at appropriate intervals the activities of their bureaus which may raise questions of legality or propriety under E.O. 12333. Any questions of legality or propriety arising from this review shall be reported to the Inspector General who shall refer any illegal activities to the General Counsel.

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1. ACTION OFFICIALS. Treasury bureau heads responsible for replying to Office of the Inspector General audit reports or Reports of Investigation.

2. AUDIT. Activity of examining and evaluating one or more Government functions within the Department and a product resulting from that activity. Audits can be described as financial audits or performance audits. The majority of the audits performed by the GIG are performance audits.

a. Performance audits include economy and efficiency and program audits. Economy and efficiency audits include determining:

(1) whether the entity is acquiring, protecting, and using its resources (such as personnel, property, and space) economically and efficiently;

(2) the causes of inefficiencies or uneconomical practices; and

(3) whether the entity has complied with laws and regulations concerning matters of economy and efficiency.

b. Program audits include determining:

(1) the extent to which the desired results or benefits established by the legislature or other authorizing body are being achieved;

(2) the effectiveness of organizations, programs, activities, or functions; and

(3) whether the entity has complied with laws and regulations applicable to the program.

3. AUDIT POLICIES. Guidelines contained in Treasury Orders and Directives or other documents within which Treasury internal audit functions must operate.

4. AUDIT STANDARDS. Criteria used to measure the adequacy of audit services. The general examination, evaluation, and reporting standards in the "Government Auditing Standards" issued by the Comptroller General of the United States will be criteria on which audit coverage and operations are based.

5. INTERNAL AFFAIRS AND INSPECTION OFFICES. Internal investigative and audit units of IRS; and the internal investigative units of BATF; USCS; and USSS.

6. INTERNAL AUDIT FUNCTION. An internal audit unit within the OIG or the IRS, with direct responsibility for auditing operations in respectively, the Treasury and the IRS.

7. SENIOR OFFICIALS. Treasury employees serving in a GS or GM-15 position or higher.