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OFFICE OF INSPECTOR GENERAL SEMIANNUAL REPORT TO
THE CONGRESS
OCTOBER 1, 1995 - MARCH 31, 1996
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
CROSS REFERENCES TO INSPECTOR GENERAL ACT, AS AMENDED
Section 4(a)(2): Review of Legislation and Regulations . . . .
. . . . . . . . . . . . . . . . . . .69
Section 5(a)(1): Significant Problems, Abuses, and
Deficiencies. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .7-53
Section 5(a)(2): Recommendations with Respect to Significant
Problems, Abuses, and Deficiencies . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 11-53
Section 5(a)(3): Significant Unimplemented Recommendations
Described in Previous Semiannual Reports. . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 63-69
Section 5(a)(4): Matters Referred to Prosecutive
Authorities . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 71-72
Section 5(a)(5): Summary of Instances Where Information Was
Refused . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .73
Section 5(a)(6): List of Audit Reports . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 75-79
Section 5(a)(7): Summary of Significant Reports. . . . . . . .
. . . . . . . . . . . . . . . . . .7-53
Section 5(a)(8): Statistical Table - Questioned Costs. . . . .
. . . . . . . . . . . . . . . . . 56-57
Section 5(a)(9): Statistical Table - Recommendations that Funds
Be Put to Better Use. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 57-59
Section 5(a)(10): Summary of Audit Reports Issued Before the
Commencement of the Reporting Period for which No Management
Decision Has Been Made. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 60-62
Section 5(a)(11): Significant Revised Management Decisions Made
During the Reporting Period . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .69
Section 5(a)(12): Management Decisions with which the Inspector
General Is in Disagreement. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .60
FOREWORD
As I enter my second year as the Treasury Inspector General, the
Office of Inspector General (OIG) continues to work towards the
President's Council on Integrity and Efficiency's vision of promoting
positive change. We have streamlined our operations and are working
to help ensure efficient, effective service for our customers.
We understand we must be innovative in our approach to accomplishing
the OIG mission more now than ever before.
During the past 6 months, we have provided advisory and consultative
services in diverse areas, including financial statements, information
technology (IT), strategic planning, and departmental initiatives
such as the Electronic Benefits Transfer (EBT) program and the
Community Development Financial Institutions (CDFI) Fund. For
example, OIG auditors have advised the Financial Management Service
on emerging EBT issues and developments, and the Office of Evaluations
has provided technical assistance on award administration to the
CDFI Fund.
We have recently redirected a portion of our resources to two
areas of emerging significance to the Department--IT and integrity
issues. To better enable our office to offer independent and objective
assessments of the Department's IT investments, we created a new
Office of Information Technology in February 1996. The office
also will oversee internal systems development, monitor technology
advances, and assist the OIG in measuring its performance by developing
a new management information system. In addition, we have encouraged
coordination between our auditors and investigators in the realm
of procurement fraud, and have developed a number of successful
strategies for identifying and pursuing such cases.
Much of our work supports the Department's role as a leader in
Federal financial management. Over 40 percent of our audit resources
are now dedicated to the financial statement audits required by
the Chief Financial Officers Act and the Government Management
Reform Act. We are continuing to play a strong proactive role
in the development of the Department-wide audited financial statements
for Fiscal Year 1996 and the Government-wide audited statements
required for Fiscal Year 1997. While working closely with the
Chief Financial Officer and bureau managers to facilitate their
audited financial statements, we have focused on developing practical,
innovative, and cost effective solutions to the Department's financial
management responsibilities.
We intend to continually improve our ability to respond to the
needs of the Department. Our new initiatives exemplify our artnership
concept in which the OIG serves as a source of useful services
and independent advice. Our customers--the Department, the Congress,
and the American public--deserve no less than ourbest effort.
Valerie Lau
Inspector General
Department of the Treasury
April 30, 1996
Acronyms
ACS Automated Collection System
AD-CV Antidumping and Countervailing
ADP Automated Data Processing
CDFI Community Development Financial Institutions
CES Centralized Examination Station
CFO Chief Financial Officer
CID Criminal Investigation Division
DCAA Defense Contract Audit Agency
DEA Drug Enforcement Administration
DIS Distributed Input System
DMAC Departmental Microcomputer Acquisition Contract
DOD Department of Defense
DPS Document Processing System
DTS Digital Telecommunications Switching
EBT Electronic Benefits Transfer
EDP Electronic Data Processing
EFDS Electronic Fraud Detection System
EFT Electronic Funds Transfer
EITC Earned Income Tax Credit
ELF Electronic Filing
EOAF Executive Office for Asset Forfeiture
ERO Electronic Return Originator
FBI Federal Bureau of Investigation
FMFIA Federal Managers' Financial Integrity Act
FTDs Federal Tax Deposits
GAO General Accounting Office
GMRA Government Management Reform Act
GPRA Government Performance and Results Act
ICP Integrated Case Processing
ICS Integrated Collection System
IDRS Integrated Data Retrieval System
IDS Inventory Delivery System
IEF Information Engineering Facility
IGATI Inspectors General Auditor Training Institute
IPA Independent Public Accountant
IRA Individual Retirement Arrangement
IT Information Technology
NAFTA North American Free Trade Agreement Implementation
Act
NPR National Performance Review
OIG Office of Inspector General
OMB Office of Management and Budget
PCIE President's Council on Integrity and Efficiency
PRB Professional Review Board
RACS Revenue Accounting Control System
RPS Revenue Protection Strategy
SAIC Special Agent in Charge
SBA Small Business Administration
SCRIPS Service Center Recognition/Image Processing
System
SSNs Social Security Numbers
TFR Trust Fund Recovery
TFRP Trust Fund Recovery Penalty
TIES Totally Integrated Examination System
TSM Tax Systems Modernization
VOP "Vendor-On-Premise"
TABLE OF CONTENTS
Page
FOREWORD. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . i
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . 1
Information Technology Audits . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . 3
Treasury Functions and Organization . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . 4
Management and Financial Leadership . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . 4
OVERVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . 7
CHAPTER I: FINANCIAL MANAGEMENT
Financial Audits. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .11
Financially Related Reviews . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .14
CHAPTER II: ECONOMY, EFFICIENCY, AND EFFECTIVENESS
Government Performance and Results Act. . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .19
Performance Reviews . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .20
Management Assessments. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .25
Compliance. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .29
Information Technology Oversight. . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .31
Contract Oversight. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .36
CHAPTER III: INVESTIGATIVE ACTIVITIES
Integrity Awareness and Deterrence. . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .39
Criminal Investigations . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .42
Employee Conduct. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .51
STATISTICAL SUMMARIES . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .55
APPENDIX A: AUDIT REPORT LISTING OCTOBER 1, 1995, THROUGH MARCH
31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .75
Department of the Treasury
Bureau Employees
Bureau of Alcohol, Tobacco and Firearms (ATF) . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Office of the Comptroller of the Currency (OCC) . . . . . . . . . . . . . . . . . . . . . . . . . 3,500
U.S. Customs Service (Customs). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18,800
Departmental Offices (DO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800
Bureau of Engraving and Printing (BEP). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Federal Law Enforcement Training Center (FLETC) . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Financial Management Service (FMS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200
Internal Revenue Service (IRS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,500
U.S. Mint (Mint). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200
Bureau of the Public Debt (BPD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700
U.S. Secret Service (Secret Service). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800
Office of Thrift Supervision (OTS). . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 1,400
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 167,400
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 1996, describes major issues and concerns identified
during reviews or 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 Inspector General reports directly to the
Secretary and Deputy Secretary. The OIG consists of:
* 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 affect 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 that allows the Director of Secret Service and his
senior staff to evaluate the systemic and human resources of
Secret Service and how those resources support the agency
strategic plan.
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.
INFORMATION TECHNOLOGY AUDITS
Acknowledging the growing importance of information
technology to the Department and its mission, the OIG combined
its Electronic Data Processing (EDP) Audits division with its
Automated Data Processing (ADP) Support Office and formed a new
Office of Information Technology on February 18, 1996. The
Office of Information Technology will manage the OIG's
information technology resources, oversee internal systems
development and operations, monitor technology advances and
departmental activities, perform information technology audits,
and promote auditor awareness and competence concerning
information technology.
Toward these goals, the Office of Information Technology has
begun implementation of a wide area network to link the OIG's
headquarters and field offices together using faster, less
expensive, and more secure technology than that which is
currently used. Computer equipment and hardware also will be
upgraded to better performance levels. In addition, the office
has begun to acquire and install a new information system for
tracking the progress and costs of audits and investigations in
order to measure OIG performance.
The Office of Information Technology is presently observing
departmental activities related to financial systems
modernization, data center consolidation, and Treasury
Communications System implementation. The Director of
Information Technology also is providing training to OIG field
staff on auditing EDP systems in order to increase auditor
awareness and skill in addressing information technology issues
during financial and program audits and evaluations.
TREASURY FUNCTIONS AND ORGANIZATION
Treasury is organized into 12 bureaus and offices. Eleven
operating bureaus carry out specific Treasury programs. These
components are overseen by DO where policy is formulated and the
Department is managed. 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 167,400 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
Treasury's Inspector General has chaired the Audit Committee
of the President's Council on Integrity and Efficiency (PCIE)
since March 1995. During the 6 months ending March 31, 1996, the
Committee enjoyed several notable successes and undertook a
number of new challenges, some of which are described below:
* Audit Committee projects have been completed on the Federal
Employees Compensation Act, the Contract Advisory and Assistance
Service Review, and Federal Civilian Agencies' Aircraft
Management. The reports are scheduled to be issued in draft or
final form during the next few months.
* The Audit Committee conducted a number of informational
surveys of the Inspector General community in order to make
recommendations to the full PCIE on issues of importance. For
example, based on survey results, the Committee will recommend
that the PCIE pursue a "Master Contractor Concept" for
contracting for audit services. This concept will allow
participating Inspectors General to procure Independent Public
Accountant (IPA) audit services through a Master Contract
administered by a host OIG.
* In conjunction with the Federal Audit Executive Committee,
efforts have begun to revise the peer review process in the
Inspector General community.
* The Audit Committee, which serves as the Board of Directors
for the Inspectors General Auditor Training Institute (IGATI),
initiated the first audit of IGATI's financial status. Treasury
OIG staffers are completing the preliminary compilation of
financial data and the audit will be performed by an IPA
presently under contract with the Treasury OIG.
* Under the Treasury Inspector General's lead, the Audit
Committee agreed to form a Task Force to revise the PCIE Manual
for Financial Statement Audits. The revision will bring the
Manual up to date with the Chief Financial Officers (CFO) Act,
the Government Management Reform Act (GMRA), and GPRA.
In addition, the OIG is playing an increasingly active role
in professional associations in order to improve and enhance the
auditing, financial management, and law enforcement professions.
OIG employees have assumed leadership positions at the local,
regional, and national levels in organizations such as the
Association of Government Accountants, the Institute of Internal
Auditors, Certified Fraud Examiners chapters, the National
Organization of Black Law Enforcement Executives, and Women in
Federal Law Enforcement.
OVERVIEW
The OIG issued 61 reports during the reporting period with
recommendations that funds be put to better use and questioned
costs totalling $16.3 million. The IRS Inspection Service issued
43 reports with recommendations that $22.6 million be put to
better use. Monetary benefits relating to investigations
conducted by the OIG and Offices of Internal Affairs and
Inspection exceeded $6.7 million. The following summaries
represent major issues and concerns for the first half of Fiscal
Year 1996.
FINANCIAL MANAGEMENT
* Despite significant Treasury progress in complying with CFO
Act and GMRA financial management requirements, major challenges
remain. The Department's ability to produce audited Treasury-
wide financial statements will depend heavily on audit results at
the two largest bureaus, IRS and Customs.
* Financial statements audit activity has increased
substantially during the past year in response to GMRA
requirements and departmental mandates. The ATF Fiscal Year 1995
statements are being audited for the first time, and preliminary
audit work began at Secret Service, BPD, and FMS in preparation
for Fiscal Year 1996 audits at those bureaus.
* Treasury's Inspector General has taken an active role in the
development of the Department-wide audited financial statements
for Fiscal Year 1996 and Government-wide audited financial
statements for Fiscal Year 1997.
TAX SYSTEMS MODERNIZATION (TSM)
* The IRS Inspection Service still considers TSM a major
Federal Managers' Financial Integrity Act (FMFIA) material
weakness. Both IRS and General Accounting Office (GAO) reports
have highlighted the same three areas of TSM development with the
greatest number of recurring deficiencies: project management,
infrastructure, and financial management.
* IRS internal auditors identified several areas that IRS
management should address in order to better transition to IRS'
future development environment. Improved management and control
over information engineering efforts could achieve substantial
cost savings, and a strategy to enable IRS employees to work in
new systems development environments is needed.
* An OIG audit identified opportunities to improve
departmental oversight of IRS TSM efforts, including initiating
independent management reviews or more effectively using the
results of TSM reviews conducted by outside organizations.
INTEGRATED DATA RETRIEVAL SYSTEM (IDRS)
* OIG auditors found that the IRS Inspection Service had
successfully completed its portion of the 35-item _IDRS Privacy
and Security Action Plan_, which was implemented to help control
browsing and other misuse. Although IRS management initiated
several proactive functions to prevent IDRS abuses, it must take
additional corrective actions.
BEP CURRENCY THEFT
* The OIG and Secret Service conducted a joint investigation
into the theft of $60,000 in Federal Reserve Notes from BEP.
* Three individuals are no longer employed at BEP and two of
them have pled guilty to conspiracy charges in connection with
the theft. In addition, a BEP contractor has pled guilty to
receiving stolen property.
"GOOD O' BOY ROUNDUP"
* The OIG investigation into allegations of Treasury
employees' participation in the "Good O' Boy Roundup" found that
125 individuals who were then employed by the Department attended
one or more "Roundups." The investigation did not reveal any
evidence that Federal agents performed the acts of racism that
occurred at the "Roundups."
* The results of the OIG's investigation were released in a
report and provided to the affected Treasury bureaus for review
and appropriate action.
GPRA PARTNERSHIP
* The OIG has taken a proactive approach by working with the
Office of the Assistant Secretary for Management to assist in the
Department-wide implementation of GPRA. This included the
development of a "GPRA Implementation Assessment Guide," a tool
for implementing and assessing strategic planning efforts.
FINANCIAL MANAGEMENT
The Department of the Treasury is responsible for
implementing and managing Federal financial policy and providing
a variety of Government-wide fiscal services. Financial
management reforms required by the CFO Act and GMRA highlight the
Department's central role in Federal financial management.
FINANCIAL AUDITS
Financial Statement Audits
Despite significant Treasury progress in complying with CFO
Act and GMRA financial management requirements, major challenges
remain. GMRA requires audited Treasury-wide financial statements
for Fiscal Year 1996, and IRS and Customs are expected to be
designated by the Office of Management and Budget (OMB) as
entities that require separate audited financial statements under
GMRA. In addition, the Secretary has established a goal of
audited financial statements with unqualified opinions for each
bureau for Fiscal Year 1996. These ambitious goals reflect the
Department's commitment to fiscal integrity and accountability.
The Inspector General is working closely with the CFO and
bureau managers to improve financial accounting and reporting,
strengthen internal controls, and facilitate audited financial
statements. During the past year, the OIG has undergone major
restructuring in order to focus more resources on financial
management issues. This has resulted in the dedication of over
40 percent of OIG audit resources to the financial statements
audits required by the CFO Act and GMRA. The OIG financial
management audit group has been strengthened by recruiting an
experienced senior executive and highly qualified financial
statements audit managers and auditors.
Financial statements audit activity has increased
substantially during the past year in response to GMRA
requirements and departmental mandates. The ATF Fiscal Year 1995
statements are being audited for the first time, and preliminary
audit work has begun at Secret Service, BPD, and FMS in
preparation for Fiscal Year 1996 audits at those bureaus. The
joint audit efforts that the OIG has initiated with GAO at BPD,
FMS, and IRS are key elements in meeting the OIG's expanded
Fiscal Year 1996 audit requirements under GMRA. Working in
partnership with GAO enables mutual audit objectives to be
achieved while economizing audit resources.
The Department's ability to produce audited Treasury-wide
financial statements will depend heavily on audit results at the
two largest bureaus, IRS and Customs. These bureaus, which have
been audited under the CFO Act since Fiscal Year 1993, are still
working to overcome significant internal deficiencies that
inhibit their ability to report timely and accurate financial
information.
Ten Fiscal Year 1995 financial statement audits remain in
progress, and one has been completed. OIG personnel are
concluding audits at Customs, ATF, and the Exchange Stabilization
Fund. In addition, the OIG's Office of Information Technology
assisted in the review of EDP controls at Customs and ATF in
connection with the Fiscal Year 1995 annual financial audits.
IPAs are completing seven audits, including those of OCC, OTS,
and the Mint.
An IPA completed a Fiscal Year 1995 audit of BEP and issued
an unqualified opinion. BEP, which produces all United States
currency, the majority of postage stamps, and certain Government
securities, has received an unqualified opinion for 11
consecutive years. The IPA did not identify any matters
involving BEP's internal control structure and its operation that
were considered material weaknesses. Tests of BEP compliance
with applicable provisions of laws, regulations, and contracts
did not identify instances of noncompliance. (Report #OIG-96-57)
However, the theft of $60,000 in currency was detected after the
close of Fiscal Year 1995. As a result of an investigation by
Secret Service, the BEP Office of Security, and the OIG, two BEP
employees pled guilty to the theft. (See write-up on "BEP
Currency Theft" in Chapter III.)
Following the theft of $1.7 million of Advanced Counterfeit
Deterrence test currency in Fiscal Year 1994, OIG and BEP
personnel evaluated internal controls and accountability over
test currency. All recommendations from the review were
implemented. In addition, BEP management also prioritized
recommendations from a Secret Service security review and an
internal control review by a public accounting firm. High
priority recommendations that were implemented included
strengthened physical security, improved tracking and record
keeping systems, new policies and procedures, and greater
compliance with internal control policies and procedures. (OIG)
Department-wide Financial Statements
Treasury's Inspector General has taken an active role in the
development of the Department-wide audited financial statements
for Fiscal Year 1996. Pursuant to National Performance Review
(NPR) streamlining initiatives, the Department volunteered to be
designated as a pilot agency to prepare a single Accountability
Report. This report will include the audited financial
statements, and other information meeting the reporting
requirements of the CFO Act, GMRA, FMFIA, GPRA, the Prompt
Payment Act, and other legislation.
Prototype financial statements will be prepared for the
Fiscal Year 1995 Accountability Report. The Fiscal Year 1996
Report will include the Department-wide statements required by
GMRA. In order to develop the most meaningful and informative
reporting model, the Department's CFO established the Financial
Statement Advisory Committee. The Inspector General serves on
the Committee, which is comprised of experts from the Department,
other Federal agencies, and the private sector. The Committee
has recommended that the financial statements highlight the
following five broad areas of the Department's activities:
manufacturing, banking/thrift oversight, central fiscal services,
tax/trade compliance and law enforcement, and
headquarters/general services. (OIG)
Government-wide Consolidated Financial Statements
The Inspector General serves on the Government-wide
Financial Statements Task Force, which includes senior officials
from GAO, the Department, OMB, the CFO Council, and the Inspector
General community. Task force members are developing a strategy
for preparing and auditing Government-wide statements for Fiscal
Year 1997, and addressing related issues through subgroups. OIG
staffers participate in five subgroups, which are intended to
define EDP audit requirements and standards; develop procedures
for verifying Federal data transmitted to FMS; identify and
eliminate inter-departmental transactions from the statements;
develop the overview and notes that will accompany the
consolidated statements; and determine what types of information
should be shared with or obtained from CFOs or OIGs at other
agencies. (OIG)
FINANCIALLY RELATED REVIEWS
Electronic Benefits Transfer
Over the past year, the OIG has worked actively with FMS and
with other OIGs through the PCIE on emerging issues surrounding
the development of the EBT program. In 1993, the NPR called for
the Federal development and implementation, in conjunction with
state and local agencies, of a national EBT system to replace the
existing paper check delivery system. It is projected that by
1999, at least 12 Federal and state benefit programs will use EBT
to deliver an estimated $110 billion in benefits annually.
Within Treasury, FMS, which is responsible for acquiring and
managing the national EBT system, will have a key role in EBT's
successful implementation. In addition, Secret Service is a
member of the EBT Task Force and is providing system and program
related security advice.
The OIG's goal is to work in partnership with FMS and other
cognizant OIGs early in the implementation process to ensure that
effective controls are built into the system to prevent and
detect fraud, waste, and abuse. During the past year, the OIG
has provided technical assistance to FMS on the development of
the national EBT system. OIG auditors are actively involved in
the ongoing risk assessment of the national system and have
provided FMS with advice on numerous issues involving security
policies, fraud controls, and EBT operating rules.
Based on their visit with representatives of the contractor
who is currently operating an EBT pilot project in Texas, OIG
auditors provided FMS with their observations and suggestions on
a number of areas, including potential fraud transactions,
recipient access to benefits, computer operations and future
program promotion, enrollment, and expansion. The OIG also
participated with other OIGs on a PCIE project to identify the
level of effort of various Federal agencies involved in the EBT
initiative.
The next several years will be critical to the successful
implementation of a national EBT program. EBT clearly holds
great promise as a more cost beneficial and effective vehicle for
dispensing billions of dollars in program benefits and providing
banking services to recipients. Delivering on that promise will
require Federal and state program managers at all levels to work
together efficiently. The OIG plans to continue its efforts to
work with Federal and state agencies and other OIGs on the
development of the EBT program to find solutions and help to
prevent problems before they occur. (OIG and Secret Service
Inspection)
IRS Financial Management System Development
IRS demonstrated its commitment to financial management
reform by beginning system modernization efforts with the Revenue
Accounting Control System (RACS) Replacement. RACS Replacement
is the successor to RACS, the automated financial management
system for the accounting transactions of IRS' tax administration
activities. By placing financial management first among its
system modernization efforts, IRS is building a foundation for
the integration of future systems with the financial accounting
system, as required by the CFO Act.
RACS Replacement bridges RACS and RACS Redesign, the true
RACS vision of the future. RACS Redesign has been planned to
conform with legal and regulatory requirements, features of which
are partially in place for RACS Replacement. In their review of
RACS Replacement, IRS internal auditors determined that system
documentation was incomplete; hardware, software, and security
contingencies were not developed and recorded in the Project
Master Plan; IRS cannot ensure that all necessary RACS data
elements are contained in RACS Replacement; and the development
costs of RACS Replacement cannot be identified.
The auditors recommended that IRS management establish
criteria and review procedures that ensure contingencies are
included in system development plans; improve procedures for
maintaining data comparison charts; and capture development costs
for each project level to enable IRS managers to improve
development methods and control costs. IRS management agreed
with the recommendations and has planned corrective actions.
(IRS Report #062705)
IRS Monitoring of Trust Fund Recovery Penalty Assessments
IRS internal auditors work jointly with GAO auditors on IRS
financial statement reviews. The audits are performed in
accordance with the CFO Act. Most of the audit reports resulting
from this collaboration are reported and distributed through GAO.
During the 6 months ending March 31, 1996, the IRS Inspection
Service issued one report addressing IRS monitoring of Trust Fund
Recovery Penalty (TFRP) assessments.
The TFRP Program is an enforcement tool used by IRS to
collect unpaid trust fund taxes. When a business fails to pay
its trust fund taxes, IRS can impose a penalty on any officer of
the business who is found to be "willful and responsible" for not
paying the taxes. The penalty is applicable only to the withheld
portion of employment taxes.
IRS internal auditors found that time-consuming manual
processes create undue taxpayer burden and cause misstated
accounts receivable. In addition, the auditors determined that
the CFO's methodology for reporting accounts receivable in the
financial statements may not properly present receivables
resulting from TFRP assessments.
The auditors recommended that IRS automate the processing of
adjustments resulting from payments or credits on related Trust
Fund Recovery (TFR) accounts, identify all business accounts with
TFRPs, and reevaluate the definition of accounts receivable
related to TFR assessments and make necessary changes to ensure
that the assessments are accurately represented. IRS management
agreed with the conditions cited in the report and responded with
implemented and planned corrective actions. (IRS Report #061610)
Electronic Fraud Detection System (EFDS)
An important component of TSM, EFDS is a significant
improvement over conventional manual detection methods for
identifying fraudulent refund returns. EFDS' successful
implementation is crucial to achieving IRS Business Master Plan
productivity and performance goals through systems improvements.
IRS internal auditors concluded that further improvements
could be made to EFDS. For example, controls were not
established to ensure that all electronic returns were loaded
onto EFDS and that potentially fraudulent returns were monitored
to closure or referred to the Criminal Investigation Division
(CID) for further investigation; security controls over user
actions were inadequate; comprehensive contingency plans were not
developed and tested for the Phase II system rollout; and EFDS
project costs were not properly accumulated, tracked, and
controlled.
The auditors recommended that IRS establish procedures to
summarize and verify the total volume and dispositions of all
electronic returns; perform periodic reviews of EFDS user lists
to identify individuals no longer needing access to the system;
and accumulate all EFDS costs incurred prior to the establishment
of the EFDS Project Office and include those costs in any related
financial reporting. IRS management agreed to take corrective
actions to address the recommendations. (IRS Report #061714)
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 focus 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 program
operations 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 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.
GOVERNMENT PERFORMANCE AND RESULTS ACT
Inter-Departmental Efforts
GPRA was signed into law in August 1993. Intended to
improve quality and delivery of services, the Act holds Federal
agencies accountable for program results by emphasizing goal
setting, customer satisfaction, and results measurement. GPRA
requires Federal agencies to submit a 5-year Strategic Plan,
Annual Performance Plans, and Annual Performance Reports on
actual performance to OMB and the Congress.
The OIG has taken a proactive approach by working with the
Office of the Assistant Secretary for Management to assist in the
Department-wide implementation of GPRA. Using evaluation and
analysis techniques, the OIG and departmental officials have
focused these efforts on integrating the strategic planning and
budget processes, and establishing performance measures that
uniformly reflect stated strategic goals and objectives.
A "GPRA Implementation Assessment Guide" was developed in
October 1995 as a joint effort between the OIG and DO. The Guide
is a self-assessment tool designed to assist the Department and
its bureaus in integrating strategic planning, budgeting, and
evaluation initiatives. This "checklist" is a composite document
which incorporates critical elements and suggestions from the Act
and various GPRA-related guides and testimonies from OMB and GAO.
In addition, the "GPRA Worksheet," a supplemental document to the
Guide, is a two-column chart which highlights GPRA requirements
under four key headings (Strategic Plans, Performance Plans,
Performance Reports, and Managerial Accountability and
Flexibility).
During the reporting period, the OIG received requests from
several Treasury bureaus for assistance in developing and
reviewing their GPRA implementation efforts. The Mint, for
example, has demonstrated initiative and notable progress in
developing its Strategic Plan. As part of its efforts, the Mint
requested and incorporated in its Plan comments from departmental
and OIG staff. In conjunction with meeting individual bureau
needs, GPRA initiatives have prompted inter- departmental
cooperation between the bureaus, DO, and the OIG. (OIG)
PERFORMANCE REVIEWS
IRS Revenue Protection Strategies
IRS is continuing an initiative to improve systems for
detecting return filing fraud in advance of issuing tax refunds.
During the first 6 months of Fiscal Year 1996, IRS internal
auditors continued to assess revenue protection activities by
issuing three audit reports. Two of the reports are summarized
below.
* The first IRS audit evaluated Electronic Return Originator
(ERO) suitability checks and monitoring efforts. EROs are
entities designated by IRS to electronically submit returns. The
IRS Electronic Filing (ELF) program allows individual taxpayers
to file Form 1040 tax returns electronically via EROs. Due to
increased electronic filing fraud, IRS tightened ELF acceptance
criteria by requiring suitability checks on all new ERO
applicants and on all EROs reapplying for the ELF program in the
1995 filing season. IRS rejected 5 percent of these ERO
applicants.
The purpose of tax verification suitability checks is to
filter out ERO applicants likely to commit fraud, and not to
identify non-compliant taxpayers. The auditors determined that
IRS could have used referral information to contact EROs involved
in questionable refund schemes and recommended that IRS
management strengthen suitability checks and monitoring efforts.
IRS management agreed to make appropriate procedural revisions to
correct identified problems. (IRS Report #060303)
* The second IRS audit concerned the implementation of Revenue
Protection Strategy (RPS) processing changes. IRS auditors
concluded that the changes effectively increased IRS' ability to
identify and scrutinize problematic refunds before issuance, and
allowed additional time for the possible review of over 7.1
million potentially problematic refunds. However, the auditors
identified areas in which better communication should improve
customer service and efficiency during the 1996 filing season.
The auditors recommended that IRS management accelerate the
finalizing of high-level decisions to provide technical staff
greater preparation time and enable more thorough testing; more
fully use available IRS technical expertise in planning and
monitoring complex RPS; and improve communications to key field
operations personnel. IRS management agreed with the findings
and has taken or plans to take corrective actions to enhance RPS
operations for the 1996 filing season. For example, IRS
management held coordination meetings; intends to request that
all RPS-related Requests for Information Services be cleared
through the Office of Refund Fraud; and plans to maintain
extensive contact with IRS service centers during the next filing
season via conference calls and site visits. (IRS Report
#060804)
IRS Early Intervention Contact Program
The IRS Early Intervention Contact Program is a separate
process within the IRS Automated Collection System (ACS) and is a
proactive attempt to change the way IRS collects delinquent tax
dollars. In order to maximize Early Intervention processing
benefits, IRS internal auditors recommended that collection
managers consider patterns or characteristics of non-productive
cases when revising Early Intervention criteria; continue efforts
to accumulate Early Intervention data that will form the basis of
future studies and analysis; and improve methods used to obtain
taxpayers' current telephone numbers and addresses.
In response to the auditors' recommendations, IRS managers
will request system changes and implement procedural changes as
needed to focus limited ACS resources more effectively. For
example, Early Intervention data will be forwarded to the IRS
Inventory Delivery System (IDS) project. IDS then will utilize
case characteristics, effectiveness data, and other information
to identify the most appropriate collection processing. In
addition, Collection will secure a national telephone research
contract to improve the quality of, reduce the cost of, and
maintain centralized control over telephone number research; and
will implement the "Fit for Use" concept through IDS by sending
to ACS only those cases on which data shows that ACS can be most
effective. (IRS Report #060402)
Importing Assault Weapons
OIG auditors found little evidence that semiautomatic
assault rifles, which were banned as imports to the United States
in 1989, have been entering the country in significant numbers.
ATF and Customs share responsibility for enforcing the ban. ATF
reviews licensed importers' applications to import weapons into
the United States to ensure that the weapons are legal, and
Customs inspects and reviews weapons that arrive at ports of
entry. The OIG found that performance measures have not been
developed for ATF or Customs, and that data has not been gathered
to determine the extent to which assault weapons may have entered
the country.
The results of the two measures that were used by OIG
auditors, the extent to which assault weapons may have been used
to commit crimes and the number of seizures of assault weapons
during ATF and Customs enforcement efforts, were inconclusive.
Crime data provided by the Federal Bureau of Investigation (FBI)
failed to separate assault weapons from other firearms. In
addition, the ATF National Tracing Center did not identify when
assault weapons entered the country, which in many cases could
have been before the ban was instituted.
One possible reason for the apparent absence of widespread
smuggling of assault weapons is that importers and manufacturers
may lack incentive. Legal replacements, known as "sporter"
weapons, possess most of the features of the banned weapons,
lacking only military characteristics such as flash suppressors,
bayonet holders, and folding stocks. However, the OIG maintains
that greater coordination between ATF and Customs is required to
ensure the effectiveness of the assault weapon ban. ATF has not
provided sufficient training to Customs inspectors at the ports
of entry to help the inspectors identify banned weapons.
Furthermore, there is little evidence to suggest that Customs has
sought ATF assistance.
OIG auditors were made aware of 18 shipments of illegal
weapons that had entered the United States at four ports of
entry. Only two of the 18 shipments had been physically examined
by Customs inspectors. Subtle differences between legal and
illegal weapons prevented Customs inspectors from identifying the
weapons as banned. The OIG therefore recommended that ATF and
Customs develop a plan to provide Customs inspectors with
training and information necessary for inspecting weapons
shipments. ATF and Customs officials have agreed to take
corrective action. (Report #OIG-96-050)
Customs Centralized Examination Stations
During a 1994 audit of Customs' Centralized Examination
Station (CES) Program, the OIG recommended the suspension of a
Los Angeles area warehouse, which was licensed and bonded by
Customs, under the Government-wide debarment and suspension
regulations. The owners and certain employees of the warehouse
were indicted in 1994 for conspiracy, bribery, and false
statement charges on matters within the jurisdiction of the
Immigration and Naturalization Service.
In January 1996, as a result of two officers' guilty pleas
to charges in the 1994 indictment, Customs initiated action to
revoke the indicted persons' Customs licenses to operate a
Container Station, a Bonded Warehouse, and as a Cartman. The
licensees appealed the revocations and a hearing was held in
March 1996. Customs officials are awaiting the hearing
transcripts before moving forward with the licenses' revocation.
As reported in the March 1995 Semiannual Report, the OIG
also recommended that Customs strengthen program management and
control. Customs has proposed regulations that would enable it
to take action against a CES operation if the owner, the entity,
or a person having substantial control committed, was indicted
for, or was convicted of acts which constitute a felony or a
misdemeanor involving theft or a theft connected crime. (Report
#OIG-95-012)
Customs Small Airport User Fees
As reported in the previous Semiannual Report, the OIG
recommended that Customs update user fee billing methodologies to
cover the cost of providing inspection services at small
airports. Customs managers are acting to ensure collection for
all services provided. In December 1995, small airports were
notified that, effective April 1, 1996, small airport user fees
would be increased to reflect Customs' current costs of providing
service.
Although the new user fee applicable to the initial year of
service is still being determined, the annual Customs user fees
for service provided in years other than the initial year have
already increased from $50,112 to $74,905 for each inspector
assigned to a small airport. The new fees are to be included in
Customs' quarterly billing cycle beginning April 1, 1996. As a
result, the Government should collect over $545,000 in additional
revenues from the new fees in the next 12 months. (Report #OIG-
95-133)
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 is formulating a support strategy
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. (Secret Service Inspection)
MANAGEMENT ASSESSMENTS
Integrated Data Retrieval System
IRS' IDRS is the primary means for accessing IRS tax data on
the master file and the status of actions on accounts in each
service center. As the result of widely reported instances in
which IRS employees used IDRS to browse the tax records of
friends, relatives, and celebrities, a 35-item _IDRS Privacy and
Security Action Plan_ was implemented to evaluate and strengthen
system security. In an earlier OIG report on this issue, the OIG
committed to monitoring the action plan and verifying selected
action items, with particular focus on the Inspection Service.
During the follow-up review, OIG auditors found that the
Inspection Service had successfully completed its action items
for helping to control IDRS misuse. In addition to these
efforts, IRS management had initiated several proactive functions
to prevent IDRS abuses. However, the new systems developed to
better control IDRS use were not always executed in accordance
with required procedures, and the position sensitivity
designations and background investigations required for persons
working on IDRS-related systems may not be at a high enough
level. Also, IRS management had improperly reported some
corrective actions necessary for implementing Inspection Service
internal audit recommendations as closed.
Among the OIG's recommendations was the need for Taxpayer
Services to better comply with IRS' certification process, to
ensure that uncompleted corrective actions regarding audit trail
requirements are undertaken, and to accredit new security systems
only after they have been unconditionally certified by the
Quality Assurance Division. IRS managers agreed and have already
planned or taken actions to implement the recommendations. The
auditors concurred with the actions, which, when fully executed,
will help to correct the reported deficiencies. (Report #OIG-96-
055)
Telecommunications Evaluation
The OIG evaluated DO local telephone invoice processes. The
evaluation identified systemic errors in the assessment of
charges by the Digital Telecommunications Switching (DTS) system,
which resulted in overcharges to certain Treasury bureaus and
some non-Treasury agencies of over $175,000 for February 1995.
During the course of the OIG evaluation, these bureaus and
agencies recovered all of the monies. The OIG suggested that the
Department's executive agent develop a formal mechanism to share
with all DTS customers information on material errors identified
on DTS statements and that Treasury bureau officials review past
DTS statements to determine if other errors had occurred.
(Report #OIG-95-E02)
Community Development Financial Institutions Fund
At the request of the CDFI Fund, the OIG provided technical
assistance in implementing the Fund's programs. The assistance
involved researching, collecting, and analyzing procedural data
critical to ensuring the integrity of award administration.
Information on policies and procedures covering award
administration was obtained from several Federal, state, and
private organizations, including the Small Business
Administration (SBA), the Departments of Labor and Housing and
Urban Development, the Neighborhood Reinvestment Corporation, the
Ford Foundation, and the State of Michigan.
A detailed analysis of award policies and procedures was
performed to identify and tailor certain procedures in place at
the organizations to the Fund's needs. The OIG issued a report
entitled, "Award Application Procedures," with the intention of
providing guidance through examples for use in managing the Fund.
Some of the suggested award administration elements included log-
in procedures and the use of evaluation criteria or principles.
The CDFI Fund was authorized by the Community Development
Banking and Financial Institutions Act of 1994. The Fund
consists of two separate programs, the CDFI Program and the Bank
Enterprise Award Program. The Fund's programs have a total
funding level of about $50 million and are designed to facilitate
the flow of lending and investment capital into distressed
communities by stimulating the creation and expansion of a
diverse set of community development financial institutions and
by providing incentives to traditional banks and thrifts.
(Report #OIG-96-E06)
Employee Relocation Costs
An OIG consultative report to the Assistant Secretary for
Management identified several opportunities to reduce Treasury
employee relocation costs. The report suggested that the
Assistant Secretary assess the desirability of adopting an
incentive award program under existing United States Code
provisions and pursuing legislative relief to allow a
reimbursement program on home sale losses when it would be cost
beneficial to the Government.
OIG auditors estimated that seven Treasury bureaus could
have saved $4.2 million in 1 year had both of the above mentioned
techniques been available. The OIG subsequently recommended a
reassessment of two best practices reported in an April 1995 OIG
audit report on Secret Service travel expenditures. (Report
#OIG-95-064)
The OIG report on Secret Service travel identified the
relocation incentive and reimbursement programs as a means of
reducing relocation costs. Both programs could encourage
employees to use the least expensive home sale contract option
and thereby reduce Department relocation contract costs. Citing
legislative and regulatory obstacles, Secret Service officials
were not amenable to pursuing these efforts. However, the OIG
has since determined that the Social Security Administration
implemented a monetary incentive program without needing
legislative relief and saved over $1 million in 1994 by doing
so.
The two best practices observed at Secret Service, if
adopted Department-wide, should increase the likelihood that
employees would use the least costly option for home sales. The
first practice gives employees at least a 120-day transfer
notice, and the second practice requires employees to market
their homes for a minimum of 60 days. Through these practices,
employees are given added time to market their homes in hopes of
finding a qualified buyer and to find a buyer without incurring
additional relocation expenses. In response to the consultative
report, the Assistant Secretary for Management indicated that
departmental managers are always open to ways to improve the
relocation process and have begun to assess the feasibility of an
employee incentive award program. (Report #OIG-CA-96-002)
Closure of the Thrift Depositor Protection Oversight Board Staff
Offices
An interim report on an OIG review of the Thrift Depositor
Protection Oversight Board office staff was sent to the Board's
Executive Director. Two additional reports will follow after
June 30, 1996, the date when all Board staff activity is
scheduled to end. The interim report noted that actions taken
thus far to meet the scheduled closing date are proper.
The report also observed that the administrative management
plan developed for closing the Board should function properly.
Remaining unexpended funding is to be used for Board expenses up
to the closing date and will continue to be available for any
Board expenses thereafter. In addition, a property and equipment
inventory is to be used in the transfer of all Board equipment.
The OIG auditors further determined that no severance pay has yet
been authorized for any individual. For such payments to be
made, a letter must be issued 90 days prior to the scheduled
closing. (Report #OIG-96-032)
ATF Inspections
During the 6-month period ending March 31, 1996, the ATF
Office of Inspection conducted 11 inspections. The inspections,
which involved the review of 57 separate headquarters and field
locations, included areas such as personnel, training, office
security, internal controls, and the quality and quantity of
investigations and inspections. In addition, all employees were
interviewed regarding morale, supervision, and work-related
problems. (ATF Inspection)
Customs Reviews
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,
1996, the Customs Office of Internal Affairs conducted three
comprehensive inspections of Special Agent in Charge offices
along with two comprehensive inspections of two port locations
which were a part of Customs' comprehensive functional
reorganization. (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. During the 6-month period
ending March 31, 1996, the Office of Inspection conducted 10
inspections of field offices, divisions, and resident offices,
including follow-up visits, re- inspections, and unannounced
audits. (Secret Service Inspection)
COMPLIANCE
Use of Forfeiture Funds by Local Law Enforcement Agencies
OIG auditors reviewed five local law enforcement agencies
that receive funds from Treasury's Executive Office for Asset
Forfeiture (EOAF). Federal forfeiture laws are intended both to
deter and punish criminal activity by depriving criminals of
property used or acquired through illegal activities, and to
share seized property with state and local law enforcement
agencies that participate in efforts which lead to seizure and
forfeiture. In Fiscal Year 1994, EOAF awards to 363 law
enforcement agencies exceeded $54 million.
The OIG's audits of three police departments, a district
attorney's office, and a local narcotics task force focused on
whether the law enforcement agencies had used shared proceeds in
accordance with Treasury guidelines. Of the approximately $3.8
million of expenditures by the five agencies that were reviewed,
the OIG questioned or set aside for further EOAF review more than
$1.5 million or about 40 percent.
The OIG found that shared proceeds were not always used in
line with Treasury guidelines and/or were supplanting rather than
supplementing local operating budgets. Some of the questioned
expenditures included salaries, overtime, furniture, training,
travel, and miscellaneous expenses. In addition, officials in
one local agency were unaware that the use of over $280,000 of
interest earned on shared proceeds was also subject to Treasury
guidelines.
Several common weaknesses in key internal controls and
systems emerged from the questioned expenditures. Required
independent audits were not always conducted, even though shared
proceeds could be used to pay for them. In addition, local
agency officials were commingling shared proceeds from other
sources, including the Department of Justice, local crime task
forces, and state governments. Commingling funds from agencies
with different guidelines on what is an allowable expenditure
creates confusion and uncertainty as to whose funds are being
used and which guidelines should be followed for any particular
expenditure.
The internal control weaknesses identified in the five
reviews raise concern over EOAF's ability to oversee and ensure
that funds are being used in line with Treasury guidelines. In
some instances, local agency officials agreed with the OIG's
findings and adjusted their financial records to remedy the
questioned expenditures. In other instances, the questioned
expenditures were referred to EOAF for a final determination as
to allowability. If the expenditures are disallowed, EOAF
sanctions may include debarring the agency from future
participation in the sharing program, recovering the disallowed
expenditures, or offsetting future shared proceeds for the
disallowed expenditures.
EOAF managers have proposed or taken corrective action,
which the OIG believes will address the internal control
weaknesses. For example, EOAF took the audit findings into
account in revising program guidelines to clarify allowable
expenditures. The OIG also assisted in this effort by providing
EOAF with technical guidance on possible auditing and reporting
requirements that could be incorporated in the new guidelines.
Furthermore, EOAF officials indicated that compliance with such
provisions as having annual audits and filing the annual
certification report will be a pre-condition for agencies to
receive and share proceeds and continue to participate in the
program. (Reports #OIG-96-038, #OIG-96-043, #OIG-96-044, #OIG-
96-051, and #OIG-96-053)
INFORMATION TECHNOLOGY OVERSIGHT
Tax Systems Modernization
TSM is the centerpiece of IRS efforts to reengineer business
processes, information systems, and organizational culture.
Since 1988, IRS has invested $2.7 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 83
reports relating to TSM initiatives, including nine in the first
half of Fiscal Year 1996. Each of these reports has been made
available to the Department for its use in facilitating
oversight. In addition, IRS internal auditors have another eight
TSM reviews in various stages of completion. Six of the nine
audit reports issued in the 6 months ending March 31, 1996 are
summarized below, along with an OIG audit of the Department's
oversight of IRS' TSM program.
* IRS is in the midst of implementing its development life
cycle for TSM. This implementation period has been and will
continue to be a learning cycle for both IRS management and
employees. During a recent review, IRS internal auditors
identified three areas that IRS management should address in
order to better transition to IRS' future development
environment. Substantial cost savings of perhaps as much as $15
million can be achieved through improved management and control
over information engineering efforts, a strategy to enable
employees to work in new systems development environments is
needed, and IRS must systematically assess the Information
Engineering Facility (IEF) and determine how the IEF will be used
in TSM development efforts. In response to the auditors'
recommendations, IRS management determined that the IEF is no
longer the primary tool being considered for systems development
and proposed to conduct a skills assessment and develop a
training curriculum that will represent the future skills
required to implement TSM. (IRS Report #062043)
* IRS developed the Service Center Recognition/Image
Processing System (SCRIPS) to process higher volumes of documents
than possible under existing systems. Other expected benefits of
SCRIPS included reduced labor and maintenance costs, manual
document numbering and data entry, and errors requiring
correction. In a prior audit report, IRS internal auditors
advised IRS management of concerns with systems testing during
the SCRIPS pilot.
During their on-line review of the SCRIPS rollout, IRS
internal auditors determined that SCRIPS was not adequately
tested or certified prior to its nationwide use, cannot process
required volumes of documents, and will cost significantly more
than the original contract award; final security certification
and accreditation was not accomplished timely; and adequate
controls to ensure that all documents are entered into and
processed through SCRIPS do not exist. The auditors recommended
that IRS management pursue the assessment of damages if the
SCRIPS contractor cannot meet throughput requirements, determine
the cost effectiveness of continuing SCRIPS, and ensure that
certifications are conducted for all future SCRIPS applications
and TSM systems prior to implementation. IRS management took or
plans to take appropriate corrective action for each
recommendation. (IRS Report #062315)
* In June 1992, IRS initiated the TAXLINK prototype to
modernize its cash management activities. TAXLINK allows
taxpayers to make Federal Tax Deposits (FTDs) using an electronic
funds transfer (EFT) system. While the prototype was originally
offered to business taxpayers in the Southeast Region on a
voluntary basis, approval of the North American Free Trade
Agreement Implementation Act (NAFTA) required IRS to accelerate
the use of EFT for FTDs. NAFTA requires a minimum of 94 percent
of all FTD revenue to be deposited electronically by Fiscal Year
1999.
Overall, the auditors determined that the TAXLINK system is
working well. As of July 1995, over 36,000 taxpayers were
enrolled in TAXLINK and $175 billion in payments had been
processed electronically. To ensure that IRS is able to
accomplish its aggressive EFT goal, the auditors recommended that
IRS management develop additional contingency plan scenarios and
test software capacity, enhance compliance procedures to ensure
that NAFTA 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. IRS management agreed with
the auditors' findings and responded that several corrective
actions had been taken and that additional actions were under
review for planned implementation. (IRS Report #061509)
* The IRS FOCUS computer software system employs artificial
intelligence technology to systematically analyze IRS criminal
investigation data in ways that are similar to systems used by
non-IRS law enforcement personnel. FOCUS was designed to provide
leads to possible criminal activities, which might not surface
using traditional IRS information gathering methods.
IRS internal auditors tested FOCUS development efforts to
determine whether the system adhered to Privacy Act requirements,
included a reliable system for measuring performance, had
adequate controls over funding, or duplicated any other planned
or existing compliance systems. The auditors recommended that
IRS management protect its investment in FOCUS by ensuring that
all taxpayer privacy issues are satisfactorily resolved,
strengthen management of the field testing process to ensure that
system functionality is refined timely and completed in an
effective and unbiased manner, improve financial accountability
by developing a system to separately track and monitor FOCUS
development costs, and study other compliance systems to identify
any opportunities to reduce costs by sharing functionality and
minimizing duplicative development efforts. (IRS Report #061104)
* IRS' Totally Integrated Examination System (TIES) is a menu-
driven series of personal computer applications, file servers,
and local area networks developed to automate the IRS Examination
function. TIES is on-line in six IRS Districts and at the Ogden
Service Center, and TIES software for laptop computers is used by
about 18,000 examiners nationwide. IRS' recent decision that
TIES is not a TSM project impacts TIES' funding and requires
Examination to reconsider TIES' future.
IRS internal auditors determined that, regardless of which
strategy Examination selects, IRS management attention is needed
to improve TIES' tax computation error correction process,
strengthen protective controls over taxpayer information, and
establish national procedures for TIES' setup and use. IRS
management intends to take a number of corrective actions,
including enforcing the policy of logging all errors, requiring
Examination managers to review Return Transaction File access
reports for unauthorized accesses, and updating national TIES
procedures and incorporating IRS Districts' "best practices" into
the Internal Revenue Manual. (IRS Report #061903)
* The IRS Distributed Input System (DIS) is the manual data
entry system primarily used to input tax return information.
DIS, which was installed in 1984, is approximately 12 years old.
The Document Processing System (DPS), a major TSM initiative, is
planned to replace DIS around the year 2003. After reviewing
DIS, IRS internal auditors recommended approaches to ease the
transition to the new system and to minimize the risk of problems
with DIS during this period. IRS management agreed with the
recommendations and has initiated appropriate corrective actions.
(IRS Report #062208)
* The OIG conducted an audit to determine whether departmental
oversight of IRS TSM efforts is sufficient. Although
departmental officials have overseen TSM efforts, recurring
problems continue in IRS TSM development. Both IRS and GAO
reports have highlighted that the four areas with the greatest
number of recurring deficiencies are project management, project
definition and planning, project cost, and system security.
The audit identified opportunities to improve departmental
oversight. For example, the report recommended that departmental
officials either initiate independent management reviews or more
effectively use the results of TSM reviews conducted by outside
organizations, including IRS inspections and GAO evaluations.
Using information from these latter sources may improve oversight
and assure the correction of recurring problems. In addition,
the OIG found that Treasury managers need to ensure that TSM
oversight responsibilities are properly integrated among the
various departmental offices based on the current definition of
TSM.
To improve departmental oversight of TSM, the OIG also
recommended that Treasury prioritize Information Resources
Management reviews of the TSM systems scheduled for budget
approval, as well as the overall purpose and cost of each
individual system. The report further recommended keeping an
updated trend analysis and following up to ensure that recurring
weaknesses have been corrected before additional funding is
approved. The Assistant Secretary for Management/CFO agreed to
all of the recommendations and provided planned corrective
actions. (Report #OIG-96-006)
Automated Data Processing (ADP) Disaster Recovery
An OIG report identified concerns with ADP disaster recovery
planning at certain Treasury bureaus. The OIG found that
disaster recovery planning has been impacted by such factors as
inadequate funding, competing demands for scarce resources, and
insufficient management support.
OMB guidelines require each Executive Branch agency to have
a plan that ensures continuity of a reasonable level of operation
in the event that a data center is incapacitated or destroyed.
To the extent possible, each plan is to be tested commensurate
with the risk and harm associated with the loss of the data
center involved. The OIG's audit alerted the Department that
more can be done at certain bureaus to improve compliance with
OMB guidance.
OMB, in an October 1995 bulletin, also requires that Federal
agencies look for opportunities to close data centers and
consolidate operations into fewer locations. Until now, the
Department's bureaus have been limited in their ability to share
data centers and achieve cost savings because of data system
incompatibility, lack of excess capacity, and data security
concerns. The OIG believes that the Department needs to ensure
that disaster recovery planning receives adequate attention as
the Department and its bureaus seek opportunities to consolidate
data center operations. The Department concurred with the OIG's
assessment and will follow up on resolving the deficiencies noted
in the report. (Report #OIG-96-052)
CONTRACT OVERSIGHT
$3.1 Million in Contract Costs Questioned
The OIG is where all Treasury bureaus may request preaward,
cost incurred, and other contract audits. 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 on page 37, the OIG performed or contracted for a
total of 39 contract audits which questioned $3.1 million in
Treasury contractor costs. Contracting officers agreed to
savings and disallowed costs of over $3.5 million, including
amounts which were questioned prior to September 30, 1995. An
additional $20.1 million in potential monetary benefits,
including amounts which were questioned prior to September 30,
1995, 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. Incurred cost
audits verify that costs claimed on cost reimbursement type
contracts are documented and properly charged to the Government.
Termination settlement audits are used as the basis to pay
contractors for preparations made and work done under the
terminated portions of contracts.
For example, during a prior period, DCAA auditors questioned
$1,170,073, or 62 percent of the costs included in a $1,878,683
proposal submitted to IRS. After negotiations, which were
conducted during the last 6 months, IRS contracting officials
attained savings of $1,072,628, or 92 percent of the questioned
costs. DCAA performed an audit of the proposal for reproduction
and support services, which had been submitted by the contractor
under an existing IRS contract in anticipation of a modification
to the contract.
The audit disclosed that the majority of questioned costs
relate to direct labor and associated indirect costs, and the
auditors took exception with the contractor's proposed mix of
labor for the effort. The contractor proposed a mix of 80
percent contractor labor and 20 percent "vendor-on-premise" (VOP)
labor. The auditors recommended 100 percent use of "VOP" labor,
contending that the use of "VOP" labor is less expensive
because
COMPLETED CONTRACT AUDITS
OCTOBER 1, 1995, THROUGH MARCH 31, 1996
PREAWARD PROPOSAL
AUDITS* OVERHEAD AUDITS** OTHER CONTRACT AUDITS*
FUNDS
TO BE PUT NUMBER COSTS COSTS
NUMBER OF TO BETTER OF QUES- NUMBER OF QUES-
REPORTS USE REPORTS TIONED REPORTS TIONED
_FMS_
0 $0 0 $0 1 $537,916
_CUSTOMS_
5 1,021,366 4 35,923 1 0
_DO_
1 67,549 2 16,327 1 0
_IRS_
2 197,030 4 15,575 5 371,783
_MINT_
0 0 2 139,302 1 0
_BEP_
1 126,574 4 79,593 2 463,303
_ATF_
1 19,024 2 0 0 0
_TOTALS***_
10 $1,431,543 18 $286,720 11 $1,373,002
* All ten preaward audits were accomplished by DCAA auditors.
All of the 11 "other" contract audits were accomplished
by DCAA.
** Fifteen overhead audits were accomplished by DCAA auditors,
one was accomplished by Health and Human Services OIG, and the
remaining two were accomplished by Treasury OIG auditors.
*** The monetary amounts are reflected in the table on monetary
benefits from OIG audits in the Statistical Summaries chapter of
this report.
it avoids the application of overhead and general and
administrative expense. (Report #OIG-95-021)
A second audit questioned $179,450 of costs associated with
a $452,471 equitable adjustment claim submitted by another IRS
contractor. After negotiations, which were conducted during the
last 6 months, IRS contracting officials attained savings of
$150,938, or 84 percent of the amount questioned. The claim was
submitted pursuant to the Contract Disputes Act of 1978 and was
for additional work performed under the contract for an
electronic filing system. (Report #OIG-94-006)
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 ATF, Customs, IRS, and Secret
Service gave over 400 presentations to 10,885 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, 1996,
318 presentations were made to 8,614 employees.
* Customs' Office of Internal Affairs special agents conduct
yearly integrity and bribery awareness presentations. In the
past 6 months, Internal Affairs agents made 76 presentations to
957 employees.
* ATF Inspection special agents and managers present integrity
awareness and Ethics in Government briefings at bureau
conferences, meetings, and supervisory, new agent, and inspector
training classes. During the 6-month period, Inspection made six
integrity awareness presentations to 123 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
integrity and ethics briefings for 1,191 employees, including
criminal investigator recruits, experienced criminal
investigators, special officers, Uniformed Division Officer
recruits, and administrative personnel. (Offices of Internal
Affairs and Inspection)
IRS Integrity Breach Assessment Process
Enhancing capabilities to detect indicators of fraud through
the use of the Integrity Breach Assessment Process is a major
goal of the IRS Inspection Service. In the Integrity Breach
Assessment Process, auditors and investigators work jointly to
profile successful investigations. The profiles are designed to
identify the methodology of crimes and related control
weaknesses. Using this process, auditors and investigators have
developed 17 prototype efforts that are focused on detecting
criminal acts, such as embezzlement of tax receipts, bribery, and
fictitious claims for tax refunds. Computer applications are
designed and tested to match IRS records with fraud indicators
similar to those profiled in successful investigations. (IRS
Inspection)
Heightening IRS Employee Awareness
The IRS Inspection Service periodically publishes Inspection
Integrity Alerts and Senior Council For Management Control
Directives to notify IRS managers of control weaknesses that have
led to integrity breaches. These documents summarize the results
of significant audits or investigations and recommend actions
that managers can take to reduce the risk of an integrity breach
in their operations.
During the period, three Inspection Integrity Alerts and
Directives were issued to highlight control weaknesses in
examinations of taxpayers and remittance processing. One
Integrity Alert informed IRS management of a situation involving
IRS employees who participated in a scheme to prepare fraudulent
tax returns and conducted bogus tax examinations. Investigations
by the Inspection Service identified approximately 40 taxpayers
who had fraudulent tax returns prepared and/or bogus tax
examinations conducted. The fraudulent activity, with a total
tax loss to the Government of over $275,000, was primarily
conducted over the previous 2 years. The Integrity Alert
characterized how the employees circumvented assignment and
inventory controls to conduct the fraud and identified actions
that IRS managers can take to prevent similar situations from
occurring in their operations. (IRS Inspection)
IRS Personnel Security Investigations
Inspection Service investigators perform personnel security
investigations that focus on a person's suitability for initial
or continued employment with IRS. These background
investigations, which are conducted to safeguard the integrity
and security of IRS in accordance with Executive Order 10450,
explore necessary areas related to the individual's character,
reputation, and loyalty to the United States.
The results of these investigations are provided to IRS
management officials for determining an individual's suitability
for employment. During the 6-month period, the Inspection
Service initiated 2,243 investigations and completed 3,332
investigations. This includes applicants for employment,
employees requiring access to classified information, and
periodic re-investigations of employees in certain sensitive
positions. In addition, background investigations are conducted
on certain contractor employees who have access to IRS computers
and/or facilities. (IRS Inspection)
ATF Professional Review Board
The OIG's Office of Oversight conducted a review of actions
taken by ATF relative to findings in the investigative reports of
ATF's Office of Inspection. In some instances, the action taken
did not appear appropriate for the seriousness of the offense.
The OIG recommended that the Director of ATF conduct an
independent review of those actions.
In response to the OIG's recommendation, ATF's Office of
Chief Counsel reviewed the matter and advised the Director of ATF
that the agency cannot impose disciplinary action against an
employee more than once for the same misconduct. Based on his
concerns regarding allegations of disparate treatment and
unfairness in disciplinary actions, the Director of ATF
established a Professional Review Board (PRB). The PRB is
responsible for reviewing internal investigations to ensure that
appropriate discipline is imposed in an objective and consistent
manner. (OIG)
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. Secret Service, which provides polygraph
support to the OIG Investigations Directorate as part of a
memorandum of agreement, conducted two polygraph examinations in
support of OIG investigations during the 6-month period ending
March 31, 1996.
BEP Currency Theft
The OIG, Secret Service, and the BEP Office of Security
conducted a joint investigation into the theft of $60,000 in
Federal Reserve Notes from BEP. On November 17, 1995, $40,000
was reported missing from a BEP cashpack. Another $20,000 was
reported as missing on December 11, 1995. Three individuals are
no longer employed at BEP as a result of the investigation, and
two of the former employees have pled guilty to conspiracy
charges in connection with the theft. In addition, a BEP
contractor has pled guilty to receiving stolen property. (OIG
and Secret Service Inspection)
Procurement Fraud
Within the OIG, increasing attention is being given to
auditors and investigators, who are commonly referred to as
"audigators," working together in the realm of procurement fraud.
OIG auditors are assisting OIG investigators on cases involving
allegations of contract and procurement fraud, providing
oversight of contract audits performed on Treasury procurements,
and performing audits and evaluations of Treasury procurement
operations. In addition, the OIG is establishing a Procurement
Fraud Task Force, which would conduct nationwide reviews of
procurement fraud within the Department.
The OIG, by combining the expertise of its investigations
and contract audit staffers, has developed a procurement fraud
initiative called Project Contract Integrity. This effort, based
on a strategy developed from experiences with cases of
procurement fraud, covers referrals, examples of "audigators"
working successfully together, indicators of procurement fraud,
and useful tools to assist auditors and investigators. It
includes effective processes for working with United States
Attorney's Offices on procurement fraud cases.
A number of cases worked by "audigators" have contributed to
a strategy for effectively addressing procurement and contract
fraud issues. One such investigation concerns a small business
contractor, who provided computer services to a Treasury bureau
and is alleged to have engaged in overbillings, bank and wire
fraud, misuse of social security numbers (SSNs), and nonpayment
of taxes. (See write-up below on "Former ATF Contractor Assessed
$3 Million.") Future projects involving contract allegations and
improprieties will utilize the strategies developed from these
cases.
One of the key elements of Project Contract Integrity is a
set of common indicators of contract and procurement fraud. (A
number of those indicators are discussed in the figure box on
page 44.) Project Contract Integrity is based on auditors'
detection of fraud indicators and subsequent referrals to the
Investigations Directorate. It also focuses on a user friendly
software package that can help detect and investigate fraud,
waste, and abuse in contracts, procurement, and business
practices. The software assists "audigators" by covering fraud
indicators, fraudulent schemes, detection methods used to
validate schemes, and criminal and civil offenses related to
specific types of fraud. (OIG)
COMMON INDICATORS OF CONTRACT AND PROCUREMENT FRAUD
* Transfer of costs from fixed price to cost type contracts.
* Contractors unable to substantiate proposed costs.
* Raw materials that can be used on different contracts;
material cost transfers from one contract to another; and
materials ordered and charged to contracts in excess of contract
requirements.
* Actual costs less than billed costs.
* Contract files not adequately documented.
* Overly restrictive specifications.
* Technical leveling (The Government reveals information to
some but not all offerors).
* Failure to get a sufficient number of bidders.
* Improper disqualification of bids.
* Biased evaluation panels or criteria.
* Awards that include items other than those contained in the
solicitations.
Former ATF Contractor Assessed $3 Million
As a result of a joint investigation by IRS and the OIG, a
former ATF contractor was assessed $3 million in tax liabilities
and penalties. After a lengthy jury trial, the owner of the
company, who committed a variety of frauds personally and in
connection with the company between 1989 and 1994, was convicted
of wire fraud, false statements, bank fraud, and misuse of a SSN.
The owner of the company was sentenced to 37 months of
incarceration, 3 years of supervised release, and $700,000 of
restitution. As reported in the previous Semiannual Report, the
former contractor gained admission to the SBA 8(a) program by
using false SSNs and providing the SBA with copies of personal
and corporate tax returns that had not actually been filed with
IRS. (OIG and IRS Inspection)
Immigration Inspectors Convicted for Disclosure of Confidential
Information
In October 1995, two Immigration inspectors, who had been
found guilty of unlawfully disclosing confidential information,
were sentenced to 6 months of home confinement and 2 years of
probation. Information previously was received by Customs'
Office of Internal Affairs that the Immigration inspectors
disclosed the existence of an ongoing investigation along with
the identity of informants involved in the investigation to a
private investigator. The case, which involves allegations that
a Customs inspector passed narcotics through a Texas port of
entry and associated with known drug smugglers, is still under
investigation. Both Immigration inspectors have been fired and
are appealing their sentences. (Customs Internal Affairs)
Extortion and Impersonation of a Customs Agent
On January 16, 1996, an individual who was not a Government
employee pled guilty to impersonation and extortion. The suspect
and a co-conspirator were indicted and charged with impersonating
a Federal officer, extortion, and conspiracy for their
participation in a scheme to shakedown a New York clothing
importer. On January 23, 1996, the co-conspirator pled guilty to
impersonation and aiding in a conspiracy. Sentencing for both
individuals is scheduled for May 1996.
An investigation was initiated after the clothing importer
alleged that a Customs agent had offered to "fix his problem with
Customs" in return for $5,000. The investigation identified the
suspect and two co-conspirators, who planned to extort money from
the importer by having the suspect pose as a corrupt "Customs
agent" who demanded a bribe to conceal supposed import
violations. Under the terms of an agreement, the suspect will
act as a prosecution witness in the upcoming trial of the second
co-conspirator. (Customs Internal Affairs)
Individuals Arrested for Smuggling Steroids
On October 28, 1995, Customs Internal Affairs agents
arrested an individual for smuggling steroids, worth
approximately $80,000, into the United States from Italy via an
international airport. Information was received that the suspect
worked for the target of a Drug Enforcement Administration (DEA)
investigation and that a Customs inspector who worked at the
international airport was believed to be assisting a drug
smuggling organization headed by the DEA investigation target.
Subsequent investigation of the case resulted in the arrest
of a second courier on October 31, 1995, and revealed that the
"Customs inspector" was actually a Department of Agriculture
employee. Both couriers, who were arraigned and released on
$25,000 and $50,000 bail respectively, are scheduled to stand
trial in April 1996. Joint investigation by Customs Internal
Affairs, the FBI, and the Department of Agriculture OIG is
continuing to identify the Agriculture employee involved.
(Customs Internal Affairs)
Customs Intelligence Research Specialist Pleads Guilty
On December 13, 1995, a Customs intelligence research
specialist pled guilty to disclosing confidential information,
and embezzlement and theft of public money, property, or records.
The intelligence research specialist also agreed to make nearly
$112,000 in civil restitution to the United States. The
restitution, which was imposed by the court, includes salary,
false claims, and penalties related to the intelligence research
specialist's paid suspension since 1992. As reported in the
previous Semiannual Report, the intelligence research specialist
disclosed confidential information obtained from a Government
computer system through her employment to a relative. In
February 1996, the intelligence research specialist was sentenced
to 3 years of probation, a $500 civil fine, and 500 hours of
community service. (OIG and Customs Internal Affairs)
Suspects Charged in Plot to Bomb IRS Building
Federal agents arrested two men on charges that they
attempted to blow up an IRS office by planting a powerful
homemade bomb outside of the building on December 17, 1995. The
men were charged with attempted destruction of a Government
building and using a destructive device in relation to a crime of
violence.
The bomb was found in the building's parking lot by an IRS
employee arriving for work. A fuse detonated the device's
blasting cap, but failed to ignite the main charge. Authorities
estimated that the bomb would have seriously damaged the IRS
building and could have killed anyone nearby had it detonated.
One of the suspects told law enforcement authorities that he and
the other suspect had planted the device the previous evening.
Reportedly, the suspects had intended to blow up the building the
night before the bomb was discovered.
Investigators from the IRS Inspection Service, ATF, and the
FBI checked more than 50 leads, many of which were phoned in by
local residents. An anonymous telephone tip led investigators to
one of the suspects. The suspect initially denied involvement in
the incident, but confessed and implicated the other suspect
after a second round of questioning. If convicted of the
attempted destruction of a Government building, the suspects face
a maximum 20-year prison sentence. The second charge, use of a
destructive device in relation to a crime of violence, carries a
mandatory 30-year sentence. Further judicial action is pending.
(IRS Inspection)
Woman Pleads Guilty to Threatening to Blow Up a Federal Building
A woman, who pled guilty on October 16, 1995 to threatening
to blow up a Federal building on the same day that the Oklahoma
City Federal Building was bombed, was sentenced to 90 days of
incarceration. On April 19, 1995, hours after the Oklahoma City
Federal Building was bombed, an anonymous female called the IRS
office in Portland, Oregon and stated, "Your building's the next
one." The call resulted in the 2 1/2-hour long evacuation of
1,500 employees from 41 agencies, with the estimated cost of lost
employee time exceeding $20,000 for IRS alone.
Approximately 2 weeks after the incident, an FBI agent
contacted the IRS Inspection Service regarding the possible
identity of the caller. The FBI had received information from
ATF regarding a witness who knew the caller's identity. According
to the witness, the woman told the witness on the morning of the
bombing that she had made the call and caused the evacuation of
the Portland Federal Building. The IRS Inspection Service and
the FBI interviewed the woman, who after persistent questioning
admitted to making the call. The woman stated that she was not
angry with IRS and did not know why she made the call for she had
no intention of actually bombing the building. (IRS Inspection)
Taxpayer Indicted In Tax Protest Scheme
A Michigan taxpayer was indicted for false claims in
connection with the submission of a bogus check to IRS. The
check, which was for payment of the Michigan man's tax liability,
was for approximately twice the amount of taxes due and was
accompanied by a demand that the excess be refunded to the
taxpayer. The signature on the check was that of the leader of
the Freemen, an alleged Montana militia group that is the focus
of intense Federal investigation.
After his arrest by the IRS Inspection Service, the taxpayer
failed to appear for arraignment and subsequently was indicted
for failure to appear. Additional Inspection Service
investigations involving this tax protest scheme are underway and
more indictments are anticipated. In view of the national scope
of the bogus checks that are being submitted to IRS, the
investigations are being coordinated with the Department of
Justice. The Inspection Service also is investigating related
harassment and intimidation schemes that involve the filing of
liens against IRS employees. (IRS Inspection)
Florida Tax Protest Schemes
The Inspection Service has been significantly involved in
Federal investigative efforts in Florida related to individuals'
attempts to impede the administration of the nation's tax laws
through threats, intimidation, and other unlawful activities. In
Tampa, the Inspection Service assisted in the investigation of a
so-called "constitutional court," which issued bogus court
documents to interfere with Federal activities, including "arrest
warrants" for specific judges, prosecutors, and IRS agents. On
March 15, 1996, eleven individuals associated with the
"constitutional court" were indicted and arrested for conspiracy
and the obstruction of justice.
In a separate investigation in the Orlando area, with which
the Inspection Service assisted, three individuals were sentenced
to significant prison terms for numerous offenses related to
filing false liens against Government officials. The three
individuals, who did not recognize Federal authority and operated
a storefront known as American National Freeman, received prison
terms ranging from 11 to 17 years. Among the individuals'
ventures was the selling of information packages on filing liens
against Government officials and avoiding Federal tax
obligations. In addition, the three individuals also were
indicted for their involvement with the "constitutional court"
described above. Legal action regarding the individuals'
offenses in that case is pending. (IRS Inspection)
IRS Impersonation Cases
Every year, taxpayers 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.
One telemarketing company defrauded over 600 taxpayers of
more than $500,000. A joint investigation by the IRS Inspection
Service and the Secret Service was initiated after a source,
developed in another IRS Internal Security investigation,
reported being solicited by a potentially illegal telemarketing
company. Eight individuals, who worked for the company involved,
were indicted for mail fraud, wire fraud, conspiracy, and aiding
and abetting.
The telemarketing company had contacted numerous taxpayers
throughout the United States and informed them that they had won
one or more prizes, including cars, jewelry, vacations, and cash.
The taxpayers subsequently were instructed to send a specified
sum to the company to cover the shipping costs and Federal income
taxes associated with the "guaranteed" prizes, which were never
sent. Most of the company's victims were elderly individuals on
fixed incomes, and some were defrauded into acquiring second
mortgages or borrowing money from relatives to secure the funds
to claim their prizes. In November 1995, three of the
individuals pled guilty to mail fraud. Two additional
individuals pled guilty to mail and wire fraud on February 26,
1996, and a plea agreement is expected from a sixth individual.
A trial for the remaining two individuals is scheduled for April
1996. (IRS Inspection and Secret Service 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 bribery
offers made to IRS employees.
An accountant, who was involved in a bribery scheme, pled
guilty to a misdemeanor conspiracy charge. As part of the
scheme, the accountant received thousands of dollars in kickbacks
for introducing individuals with tax problems to a person who
allegedly could help them eliminate their tax liabilities and/or
criminal tax investigations. An investigation was initiated
after an IRS CID special agent advised the Inspection Service
that an individual had offered the agent a bribe during a
meeting.
Over a 2-year period, the accountant referred several
taxpayers to the individual, who served as a middleman and put
the taxpayers into contact with the cooperating CID agent. One
taxpayer, who paid the cooperating CID agent approximately
$18,000 to eliminate a tax liability of nearly $100,000, later
entered into a plea agreement to provide testimony regarding the
accountant. In addition, after being confronted with information
captured on tape during monitored phone calls and meetings, a
second taxpayer, who entertained the idea of a bribe, but never
actually paid the cooperating CID agent, was granted immunity in
exchange for testimony against the accountant.
A third taxpayer, who paid the cooperating CID agent over
$19,000 in cash and wire transferred over $200,000 to an
undercover bank account in order to be eliminated from a grand
jury investigation, was convicted of bribery and sentenced to 2
years of imprisonment. Two additional taxpayers were convicted
of conspiracy and bribery and each received a 6-month sentence.
The middleman entered into a plea agreement with the United
States Attorney's Office, agreed to provide testimony regarding
the accountant, and subsequently pled guilty to bribery,
conspiracy, and money laundering. Sentencing of the accountant
and the middleman is pending. (IRS Inspection)
Workers' Compensation Fraud Investigation
A Mint employee, who received compensation for 8 years,
returned to work after an OIG investigation revealed that the
employee was not totally disabled and was capable of performing
some duties. As a result of the investigation, a medical exam
was ordered, a modified job offer was made, and the employee
returned to work, resulting in lifetime savings to the Government
of $967,000. (OIG)
Former Special Agent in Charge Sentenced
On December 18, 1995, a former Secret Service Special Agent
in Charge (SAIC), who pled guilty to making false statements, was
sentenced to 5 months of imprisonment, 5 months of home
detention, 100 hours of community service, and nearly $30,000 in
restitution. As reported in the previous Semiannual Report,
information developed by the OIG and subsequent investigation by
Secret Service inspectors disclosed that the former SAIC had
stolen money from Secret Service's confidential fund. (OIG and
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.
"Good O' Boy Roundup"
On March 29, 1996, the OIG released its report on the "Good
O' Boy Roundup." The report was the culmination of an 8-month
long investigation into allegations of Treasury employees'
participation in the annual southeastern Tennessee event, which
has taken place every year since 1980. The investigation was
initiated after newspaper and television reports raised concerns
that law enforcement officers, and ATF agents in particular, had
participated in racists acts; the misuse of Government time,
resources, and equipment; and excessive drinking. Additional
allegations of other inappropriate and illegal acts, including
rape, various types of sexual misconduct, and drug use,
subsequently arose in hearings before the Senate's Committee on
the Judiciary.
To investigate the allegations, over 33,000 of the
Department's law enforcement employees were queried to determine
their participation in and knowledge of the "Roundup."
Subsequently, approximately 400 interviews of Federal, state and
local law enforcement personnel and of civilians were conducted.
The OIG determined that 125 individuals who were then employed by
the Department attended one or more "Roundups."
Acts of racism did occur at the "Roundups." The OIG's
investigation did not reveal any evidence that Federal agents
performed those acts. In addition, the OIG found no credible
evidence to support other allegations of illegal acts, such as
rape, prostitution or drug use, at the "Roundups," and determined
that nearly all "Roundup" participants were white males, with a
limited number of women and minorities in attendance. The
results of the OIG's investigation have been provided to the
affected Treasury bureaus for review and appropriate action.
(OIG)
Former FinCEN Employee Sentenced
On March 5, 1996, a former FinCEN employee, who pled guilty
to the unauthorized disclosure of information and the conversion
of Government property, was sentenced to 30 days in jail, 30 days
of home detention, and 1 year of probation; was barred from
seeking Federal employment in law enforcement, security, or the
intelligence area; and was ordered to pay over $1,900 for the
cost of his incarceration. As part of the plea agreement, the
former FinCEN employee agreed to pay nearly $12,000 of criminal
restitution and $100,000 of civil restitution.
The former FinCEN employee received a downward departure
from the sentencing guidelines due to his cooperation in a
related investigation conducted by the Department of Justice. As
reported in the previous Semiannual Report, a joint investigation
by the OIG, the FBI, DEA, Customs Internal Affairs, and IRS
determined that the former FinCEN employee had disclosed
confidential information obtained through his employment to a
private investigator who used the information in a case. (OIG)
ATF Harassment and Retaliation Inquiry
In May 1994, a female ATF employee filed a complaint
concerning harassment and reprisal with the then Chairman of the
Senate Subcommittee on Treasury, Postal Service, and General
Government. At the Chairman's request, the OIG conducted a
review and issued a report on the matter to the Director of ATF.
The OIG determined that ATF management actions were not
always consistent with prescribed policies and procedures
regarding the supervision and treatment of the complainant. In
addition, the OIG did not find ATF's justification and decision
to terminate the complainant from employment to be credible. The
OIG also determined that once the complainant filed allegations
of discrimination, the Equal Employment Opportunity process
proceeded in an appropriate manner, and that an investigation of
the complainant regarding the falsification of documents was
handled properly.
Two recommendations were made to correct the deficiencies
identified. Although ATF agreed to take the necessary actions to
implement the recommendations, it did not agree with the report
as presented. The OIG subsequently reexamined the facts and
conclusions in the report and determined that the report was
fairly presented. (OIG)
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 1995 - MARCH 1996_ a/
_6 MONTHS ENDED_
_9/30/95_ _3/31/96_ _TOTAL_
_AUDITS_
Audit Reports 138 101 239
Recommended Monetary Benefits (in Thousands):
Questioned Costs $4,454 $4,352 $8,806
Savings 30,068 b/ 23,989 54,057
Revenue Enhancements _433,500_ _2,400_ _435,900_
Total $468,022 b/30,741 $498,763
_EVALUATIONS_
Evaluation Reports 0 3 3
Recommended Monetary Benefits (in Thousands):
Savings 0 $175 $175
_INVESTIGATIONS_
Cases Opened 2,197 2,051 4,248
Cases Closed 2,115 1,812 3,927
Successful Prosecutions 143 133 276
Administrative Sanctions 512 434 946
Recoveries and Penalties
(in Thousands) $6,052 $6,782 $12,834
_OVERSIGHT AND QUALITY ASSURANCE REVIEWS_
Reviews and Analyses 10 3 13
a/ Includes statistics for the OIG and Treasury Offices of
Internal Affairs and Inspection.
b/ Adjusted figures.
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,
1996.
OIG Audits and Evaluations Reports
Multi-Bureau 4
ATF 4
Customs Service 12
DO 13
BEP 8
FMS 1
IRS* 14
Mint 3
BPD 1
Independent Entity _1_
61
Inspection Service Audits of IRS _43_
Total _104_
* Includes OIG contract audits.
Audit 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, 1996
_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 17 $8,229 $0
2. Which were issued
during the reporting
period _17_ b/ _4,352_ _0_
3. Subtotals (1 plus 2) 34 12,582 0
4. For which a management
decision was made during
the reporting period 5 c/ 1,945 0
* dollar value of
disallowed costs 5 c/ 1,216 0
* dollar value of costs
not disallowed 3 729 0
5. For which no management
decision has been made by
the end of the reporting
period (3 minus 4) _29_ _$10,637_ _$0_
6. Reports for which no
management decision was
made within six months of
issuance _14_ _$7,089_ _$0_
a/ "Questioned costs" includes "unsupported costs."
b/ Ten 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, 1996
_Savings_ _Revenue
(in Thou- Enhancements_
_Report Category_ _Number_ _Total_ sands) (in Thousands)
1. For which no
management decision has
been made by the
commencement of the
reporting period 27 $25,185 $13,725 $11,460
2. Which were issued
during the reporting
period 10 a/ 3,815 3,815 0
3. Subtotals (1 plus
2) 37 29,000 17,540 11,460
4. For which a
management decision
was made during the
reporting period 12 7,700 6,200 1,500
* dollar value of
recommendations that
were agreed to
by management 8 b/ 4,432 2,932 1,500
* based on proposed
management action 8 b/ 4,432 2,932 1,500
* based on proposed
legislative action 0 0 0 0
* dollar value of
recommendations that
were not agreed to
by management 7 3,268 3,268 0
5. For which no
management decision has
been made by the end of
the reporting period
(3 minus 4) _25_ _$21,300_ _$11,340_ _$9,960_
6. Reports for which no
management decision was
made within six months
of issuance _16_ _$17,597_ _$7,637_ _$9,960_
a/ Nine audits were performed under OIG contract by DCAA totaling
$1,431,543.
b/ Three reports were 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, 1996
_Savings_ _Revenue
(in Thou- Enhancements_
_Report Category_ _Number_ _Total_ sands) (in 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 _3_ _22,574_ a/_20,174_ _2,400_
3. Subtotals (1 plus
2) 3 22,574 20,174 2,400
4. For which a
management decision
was made during the
reporting period 3 22,574 20,174 2,400
* dollar value of
recommendations that
were agreed to by
management 3 22,574 20,174 2,400
* based on proposed
management action 3 22,574 20,174 2,400
* 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/ One financial accomplishment included $100 million in savings
to taxpayers, which is not reflected in this table.
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, 1996, 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 30
such reports.
_Report Title and Date_ _Report Number_ _Amounts_
1. Defective Pricing Review
of Cost or Pricing Data
Submitted under Contract
TIR-89-0056, Task Order 63,
8/27/93 a/ OIG-93-111 $ 61,652
2. Supplemental Audit Report
on Defective Pricing Review
of Cost or Pricing Data
Submitted Under Contract
TIR-89-0056, Task Order 63,
9/1/93 a/ OIG-93-119 47,836
3. Evaluation of Costs
Incurred for Fiscal Years
1990, 1991, and 1992 under
Contracts TC-88-008,
TC-89-025, TC-90-002, and
TC-89-022, 9/29/93 a/ OIG-93-136 172,308
4. Evaluation of Termination
Settlement Claim Submitted
Under Contract Number TEP-90-5(TN)
for High Voltage Electrical
Services, 1/7/94 a/ OIG-94-044 578,471
5. Evaluation of Initial
Pricing Proposal Submitted in
Response to Solicitation
IRS-93-0118 for Automated
Data Processing Equipment
Maintenance, 1/27/94 a/ OIG-94-047 127,017
6. ATF Administration of
Cover Over Payments to Puerto
Rico and the Virgin Islands,
3/28/94 c/ OIG-94-063 3,160,000
7. 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
8. 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
9. 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
10. Evaluation of Proposal
Submitted Under Contract
TEP-91-66 for Installation
and Support Services for
Currency Inspection Systems,
7/19/94 a/ OIG-94-115 275,148
11. 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
12. Defective Pricing Review
of Cost or Pricing Data
Submitted Under Contract
TATF-93-3, 7/22/94 b/ OIG-94-118 463,917
13. Evaluation of Subcontract
Price Proposal Submitted
under Contract TEP-91-66 for
Slitting, Batching and
Stacking Systems,
10/3/94 a/ OIG-95-001 853,600
14. 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
15. 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
16. 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
17. 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
18. Evaluation of Change
Order Proposal Submitted Under
Contract TIR-93-0025 for
Workload Redistribution of the
Service Center Recognition/
Image Processing System,
4/25/95 a/ OIG-95-067 602,416
19. Evaluation of Direct
and Indirect Costs and Rates
Claimed Under Contract
TC-88-013 for Fiscal Year
Ended September 30, 1990,
5/11/95 a/ OIG-95-075 49,507
20. Evaluation of Direct
and Indirect Costs and Rates
Claimed Under Contract
TC-88-013 for Fiscal Years
Ended September 30, 1991
and 1992, 6/13/95 a/ OIG-95-088 227,757
21. Evaluation of Initial
Pricing Proposal Submitted
in Response to Solicitation
BEP-95-41(TN) for Color
Shifting Ink, 6/20/95 b/ OIG-95-091 1,008,465
22. Verification of Costs
Incurred Under Contract
TATF-93-3, 6/29/95 b/ OIG-95-098 371,547
23. Evaluation of Initial
Pricing Proposal Submitted
in Response to Solicitation
CS-95-034 for Treasury
Enforcement Communications
Systems Application Development
and Maintenance Support,
7/5/95 b/ OIG-95-099 308,809
24. Evaluation of Pricing
Proposal Submitted Under
Pro Forma Contract
TEP-96-01(TN) for Advanced
Counterfeit Deterrent Flush,
7/13/95 b/ OIG-95-100 257,275
25. Evaluation of Proposal
Submitted in Response to
Solicitation USSS-95-02 for
Computer System Maintenance
Support Services,
8/9/95 b/ OIG-95-113 97,490
26. Follow-Up Audit of the
Federal Workers' Compensation
Program at the Bureau of
Alcohol, Tobacco and Firearms,
8/24/95 d/ OIG-95-118 4,000,000
27. Evaluation of Pricing
Proposal Submitted in Response
to Solicitation IRS-95-0044
for Composite Mail Processing
Systems Maintenance,
8/30/95 a/ OIG-95-120 2,725,183
28. Evaluation of Initial
Pricing Proposal Submitted in
Response to Solicitation
BEP-95-46(TN) for Cotton Fiber
Rollers, 9/19/95 a/ OIG-95-122 207,363
29. Final Report on the
Executive Office for Asset
Forfeiture's Investment of the
Treasury Forfeiture Fund,
9/27/95 d/ OIG-95-126 2,200,000
30. Opportunities to Improve
ATF's Explosives Licensing and
Inspection Program,
9/29/95 e/ OIG-95-129 600,000
TOTAL $24,686,437
a/ Contract negotiations have not yet been held.
b/ The OIG is in the process of reviewing the price negotiation
memorandum.
c/ Recommendation is awaiting decision from General Counsel.
d/ There is no planned corrective action in place.
e/ ATF needs to revise explosive regulations.
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.
_Report Title/Potential
Monetary Benefits and
_Report Number_ _Issue Date_ Recommendation Summary_
_OIG Audits_
OIG-92-062 9/92 Department of the Treasury's
Follow-up of Corrective
Actions
Revise Treasury Directive
40-03, Treasury Audit
Recommendation Monitoring
system. (Two recommendations)
OIG-94-024 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-93-040 3/93 Customs Aviation Safety and
Training Program
Maintain complete and accurate
records, including damage cost
data for all aircraft mishaps
and reflect same in aircraft
accident/incident database.
OIG-94-055 3/94 Customs Aviation Maintenance
Contract
Establish procedures for
branch personnel to monitor
Department (DOD) core refunds
and periodically verify that
DOD core credits are properly
received and accounted for by
the contractor.
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,
Office of the General Counsel,
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)
_Inspection Service Audits_
#033009 6/93 Modernizing the Master File,
$45,000
Correct mismatches caused by
one and two-digit differences
in secondary SSNs systemically
during service center
processing.
#034008 7/93 Automated Underreporter
Project Initiation and Tax
Year 1988 Limited Pilot,
$1,315,000
Determine whether contract
overcharges can be recovered.
(Two 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)
#041306 12/93 On-Line Review of the
Service's Electronic Filing
Fraud Detection Efforts During
the 1993 Filing Period
Improve fraud prevention and
detection by changing refund
deletion procedures to ensure
that fraudulent refunds are
stopped when they are detected
and by establishing taxpayers'
authenticity by checking prior
year information returns.
(Three recommendations)
#041403 1/94 Nonresident Alien Information
Documents
Enhance computer consistency
and validity controls to
ensure the integrity of Forms
1042 submitted by withholding
agents. (Three
recommendations)
Use computer analysis to
measure, examine, and enforce
compliance with Form 1042
requirements.
Improve coordination of
compliance enforcement efforts
with a systematic approach
taken to identify the causes
of noncompliance by
withholding agents and by
recipients. (Five
recommendations)
#042404 3/94 Standards Planning and
Implementation for TSM
Consolidate responsibility for
the vision, framework, and
strategy for IRS ADP
standards efforts.
Ensure the development of
useable, understandable ADP
standards that focus on user
needs. (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. (Four
recommendations)
#043303 7/94 Automated Underreporter
Systems Tax Year 1990
Development and Testing and
Tax Year 1991 Rollout
Address data access security
issues associated with
implementation of the
Automated Underreporter
System. (Three
recommendations)
#044104 8/94 Usefulness and Economy of the
Departmental Microcomputer
Acquisition Contract (DMAC)
Instruct DMAC contracting
officers and users about
potential savings that can
occur when delaying purchases
for a short period, and assure
that contract prices remain
competitive with market
prices. (Two recommendations)
#044201 8/94 Information Security Over
Small Scale Computer Systems
Ensure greater oversight and
security over sensitive
taxpayer information contained
on personal computers and
minicomputer systems. (Three
recommendations)
#044301 8/94 Local Telecommunications
Expenses
Establish accurate inventories
of local telephone lines,
verify the need for lines and
features through annual
reviews, and match inventories
with billings.
#045601 9/94 Electronic Return Preparer
Fraud, $54,000,000
Identify and remove dishonest
preparers from the Electronic
Filing Program. (Two
recommendations)
#050602 12/94 Tax Administration and
Policies Relating to Illegal
Aliens
Change criteria for the
Unallowable Code Program and
change policy and tax
publications for the filing
season to advise taxpayers to
obtain receipts from the
Social Security Administration
when receiving new SSNs. (Two
recommendations)
#051006 12/94 Processing of 1993 Individual
Income Tax Returns,
$10,000,000
Revise Earned Income Credit
worksheets to refer taxpayers
to W-2 information about
deferred income.
Promote the use of Form
1040EZ.
#051205 1/95 Questionable Refund Program,
$254,000,000
Develop procedures to ensure
all service centers more
effectively use computer
capabilities to identify
fraudulent refund scheme
returns; examine closely
probable fraudulent paper tax
returns; identify multiple
refund scheme returns with the
same address; and communicate
uniform measurement and
performance indicators to
stakeholders. (Eight
recommendations)
#051302 1/95 Readiness for the Pilot Test
of the Automated Criminal
Investigation System
Establish plans to allow
management to monitor progress
and track productivity
increases realized by the
Automated Criminal
Investigation System.
#051408 1/95 Opportunities for Reducing the
Collection Queue Inventory
Reduce the risk that
unproductive collection 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.
(Ten 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. (Four
recommendations)
#052106 2/95 National Account Profile
Improve communication and
coordination of information
between IRS and the Social
Security Administration to
improve controls. (Twelve
recommendations)
#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. (Five
recommendations)
#053304 2/95 Integrated Collection System
(ICS) Expanded Prototype
Enhance performance,
strengthen systemic management
controls, expand ICS
education, improve system
documentation, and include
Inspection user requirements.
(Seven recommendations)
#054102 4/95 Automated Financial System
Standardized Security Profiles
Revise published profile
guidelines to accurately
reflect user capabilities and
establish validation
procedures.
#053102 4/95 Invalid Segment of the
Individual Master File
Strengthen entity control
procedures and make Master
File programming changes to
better ensure compliance with
filing regulations and deter
refund fraud on the Invalid
Segment of the Individual
Master File. (Two
recommendations)
#052504 5/95 Integrated Case Processing
(ICP) Program
Determine the focus of the
District Office Concept of
Operations and whether
functionality will still be
delivered through ICP or some
other means.
Analyze and design ICP Release
3.
#054406 5/95 Service Center
Recognition/Image Processing
System Pilot
Design Quality System Testing
to contractually mandated
output and storage volumes and
assess the average read
accuracy rate prior to
national implementation.
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.
#054903 6/95 Implementation of the Document
Processing System
Process new Forms 1040S
through the Distributed Input
System in 1996 for the filing
year 1997 until DPS is
piloted.
#05503 7/95 Tax Implications of the New
Earned Income Tax Credit
(EITC) Laws
Coordinate Compliance,
Taxpayer Service, Submission
Processing, and Information
Systems functions to develop
and implement an action plan
to resolve erroneous EITC
claims during initial
processing.
Clarify EITC instructions for
defining requirements for
taxpayers without qualifying
children who file joint
returns.
Provide additional training to
employees to emphasize EITC
requirements for filers
without qualifying children.
#056102 8/95 Telefile Program 1995 Filing
Season
Provide nationally coordinated
direction and training as part
of marketing efforts for the
expansion of Telefile. (Two
recommendations)
#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
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.
Take actions to alleviate
undue taxpayer burden when
there are date of birth
mismatches.
#057204 9/95 Stopping Fraudulent Electronic
Filing Refunds at Non-ELF
Centers During the 1995 Filing
Season
Enhance listings of stopped
ELF refunds and provide
listings to all interested
users in IRS service centers.
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 numerous Treasury Directives and Treasury Orders in
the 6 months ended March 31, 1996. The Department is reviewing
its internal regulations as part of the Administration's
regulation reduction initiative. In addition, the OIG reviewed a
total of eight existing and proposed legislative items. Of this
number, the OIG provided comments on four 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, 1996. 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 66 40 2 24
Referred to program managers 116 49 12 55
Referred to other agencies _3_ _3_ _0_ _0_
Totals _185_ _92_ _14_ _79_
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, 1996. 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 2,081* 184 109 411 1,352* 25
Number of cases opened
during the period 2,051 82 98 194 1,651 26
Number of cases closed
during the period 1,812 86 90 187 1,412 37
Number of open cases
at the end of the period 2,320 180 117 418 1,591 14
*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 136 0 0 27 109 0
Procurement and contract
irregularities 10 8 0 0 2 0
Assaults/threats 555 0 8 5 537 5
False statements and
claims 205 13 12 13 166 1
Theft/misuse of funds/
property 328 10 19 31 268 0
Drug abuse and control 45 0 4 11 30 0
Impersonating a Government
official 71 1 0 0 70 0
Criminal -- Other 282 4 4 4 269 1
Sexual Harassment 18 2 1 12 3 0
Improper conduct or
disclosure 320 16 33 77 176 18
Non-Criminal -- Other _81_ _28_ _17_ _14_ _21_ _1_
Total Allegations 2,051 82 98 194 1,651 26
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, 1996. 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 571* 15 0 10* 541 5*
Number of cases referred
to prosecutive authorities
during the period 709 15 9 23 659 3
Number of cases accepted
for prosecution during the
period 140 11 0 6 123 0
Number of declinations
during the period 491 4 5 11 468 3
Number of cases pending
prosecutive decision at
the end of the period 649 15 4 16 609 5
*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, 1996.
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 14
ATF 0
USCS 16
IRS 102
USSS _1_
Total _133_
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 3
ATF 31 0
USCS 31 0
IRS 327 0
USSS _6_ _0_
Total _431_ _3_
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 $3,059,324 $1,859,925 $15,930 $0 $1,183,469
ATF 700,000 0 700,000 0 0
USCS 312,732 194,082 118,650 0 0
IRS 2,680,833 2,382,688 298,145 0 0
USSS _29,000_ _29,000_ _0_ _0_ _0_
Total $6,781,889 $4,465,695 $1,132,725 $0 $1,183,469
Access to Information
The Inspector General Act requires Inspectors General to
report on unreasonable refusals of information available to the
agency which relate to programs and operations for which the
Inspector General has responsibilities. There were no instances
to report where information or assistance requested by the
Inspector General or the Offices of Internal Affairs and
Inspection were unreasonably refused.
APPENDIX A: AUDIT REPORT LISTING 1/
OCTOBER 1, 1995, THROUGH MARCH 31, 1996
OIG Audits
Multi-Bureau
Follow-up Audit of the Federal Workers' Compensation Program at
the U.S. Customs Service, OIG-96-007, 10/19/95,
$2,100,000 S
Confirming the Accuracy of Price Guarantee Billings by Louisiana
Gasification Technology, Inc., from October 1995 through December
1995, OIG-96-034, 2/14/96
Status of ADP Disaster Recovery Within the Department of the
Treasury, OIG-96-052, 3/29/96
The Treasury Department's Compliance with Public Law 101-121, the
Anti-Lobbying Act, OIG-96-054, 3/29/96
Bureau of Alcohol, Tobacco and Firearms
Proposal Submitted in Response to Solicitation BATF-95-3 for
Computer Data Entry Services, OIG-96-011, 10/20/95, $19,000 S
Direct and Indirect Costs and Rates Claimed for Fiscal Year 1990,
OIG-96-014, 10/27/95
Direct and Indirect Costs and Rates Claimed for Fiscal Years
Ending December 31, 1991, 1992, and 1993, OIG-96-015, 11/2/95
_________________________________________________________________
1/ Amounts shown for some reports represent recommended monetary
benefits. Q = Questioned Costs; S = Savings; R = Revenue
Enhancements.
2/ Not included in the Potential Monetary Benefits on pages 57
and 58.
ATF Needs to Better Assist Customs to Prevent Illegal Assault
Weapons from Entering the United States, OIG-96-050, 3/29/96
U.S. Customs Service
Provisional General and Administrative Rate for Fiscal Year 1995,
Applicable to Contract TC-90-049, OIG-96-002, 10/16/95
Incurred Costs Under Contract TC-90-049 for Calendar Year 1994,
OIG-96-005, 10/18/95, $2,300 Q
Incurred Costs Under Contracts TC-85-37 and TC-87-38 for Fiscal
Years 1988, 1989, 1990, and 1991, OIG-96-009, 10/20/95, $33,600
Q
Direct and Indirect Costs and Rates Claimed Under Contracts TC-
86-101, TC-92-002, TIR-92-0014, and TIR-92-0057 for Fiscal Years
1991, 1992, and 1993, OIG-96-012, 10/20/95
Intellectual Property Rights Infringement at the U.S. Customs
Service, OIG-CA-96-001, 10/25/95
Initial Pricing Proposal Submitted in Response to Solicitation
CS-95-057 for Library Support Services, OIG-96-022, 12/21/95,
$111,200 S
Follow-up Audit of the United States Customs Service
Accountability Over Firearms, OIG-96-025, 1/30/96
Proposal Submitted in Response to Solicitation CS-95-034 for
Support Services to the Treasury Enforcement Communication
System, OIG-96-031, 2/13/96, $147,800 S
Initial Pricing Proposal Submitted in Response to Solicitation
CS-I-96-001 for Automated Data Processing Facilities, Operation,
Management, and Maintenance, OIG-96-035, 2/27/96, $301,700 S
Incurred Costs Under Contract TC-90-022 and Purchase Order CS-I-
94-30965-5 for Fiscal Years 1992, 1993, and 1994, OIG-96-037,
3/1/96
Direct Labor and Other Direct Costs Submitted Under Contract TC-
93-029 for Vessel Maintenance Services to the Territory of Puerto
Rico, OIG-96-045, 3/18/96, $460,600 S
Timekeeping Practices Applicable to Solicitation CS-94-010, OIG-
96-046, 3/21/96
Departmental Offices
Government Performance and Results Act, OIG-95-E01, 10/95
Departmental Offices Local Telephone Invoice Process, OIG-95-E02,
10/95, $175,000 S 2/
Community Development Financial Institutions Fund Award
Application Procedures, OIG-96-E06, 2/96
Costs Incurred Under Contract TOS-92-71 for Audit Services, OIG-
96-001, 10/12/95, $10,900 Q
Pricing Proposal Submitted Under Contract TOS-95-117 for
Development of Detailed Configuration Plans for Local and Wide
Area Network Connectivity, OIG-96-020, 12/7/95, $67,500 S
Follow-Up Review of Electronic Data Processing General Controls,
Applicable to Contract TOS-92-33, OIG-96-030, 2/6/96
Use of Equitable Sharing Funds by the Philadelphia, Pennsylvania
Police Department, OIG-96-038, 3/4/96, $282,300 S, $22,100 Q
Costs Incurred Under Contract TOS-91-31 for Calendar Year 1991,
OIG-96-042, 3/12/96, $5,400 Q
Use of Equitable Sharing Revenues by the Jefferson County, Texas
Narcotics Task Force, OIG-96-043, 3/12/96, $47,200 Q
Equitable Sharing Revenues by the Beaumont, Texas Police
Department,
OIG-96-044, 3/12/96, $271,900 Q
Use of Equitable Sharing Funds by the Philadelphia, Pennsylvania
District Attorney's Office, OIG-96-051, 3/29/96, $432,700 Q
Executive Office for Asset Forfeiture: Use of Equitable Sharing
Funds by the El Segundo Police Department During Fiscal Year
1994, OIG-96-053, 3/29/96, $1,919,000 Q
Opportunities to Reduce Relocation Costs Within Treasury, OIG-CA-
96-002, 3/29/96, $21,000,000 S 2/
Bureau of Engraving and Printing
Incurred Costs Under Contracts TEP-90-18(N) and TEP-87-43(N) for
Fiscal Years 1990-1993, OIG-96-003, 10/16/95
Direct and Indirect Costs and Rates Claimed Under Contract TEP-
91-66 for Fiscal Years 1991 and 1992, OIG-96-010, 10/20/95
Incurred Costs Under Contract TEP-91-30 for Fiscal Years 1991,
1992, 1993, and 1994, OIG-96-016, 11/8/95, $6,400 Q
Initial Pricing Proposal Submitted in Response to Solicitation
BEP-95-75-(N) for Die Wiping Paper, OIG-96-029, 2/5/96, $126,600
S
Adequacy of Initial Disclosure Statement, Dated January 27, 1993,
OIG-96-033, 2/14/96
Subcontractor Incurred Costs Under Purchase Order S9216 for
Payroll & Personnel Conversion Services, OIG-96-041, 3/8/96,
$73,200 Q
Termination Settlement and Equitable Adjustment Proposals
Submitted Under Contract TEP-93-05(N) for a Stamp Coil Packaging
Machine, OIG-96-049, 3/29/96, $463,300 Q
Audited Fiscal Years 1995 and 1994 Financial Statements of BEP,
OIG-96-057, 3/29/96
Financial Management Service
Termination Settlement Proposal Submitted Under Contract T-FMS-
95-5 for Teleprocessing Services, OIG-96-036, 2/29/96, $537,900
Q
Internal Revenue Service
Evaluation of Contractor's Billing System, OIG-96-004, 10/17/96
Treasury's Oversight of the Internal Revenue Service's Tax
Systems Modernization Program, OIG-96-006, 10/18/96
Contractor's Methodology of Calculating Value Add and General and
Administrative Expense Pools Under Contract TIR-91-0072, OIG-96-
013, 10/20/95
Indirect Costs and Rates Claimed for Fiscal Year 1994, OIG-96-
017, 11/8/95
Evaluation of Contractor's Planning and Budget System, OIG-96-
019, 11/30/95
Equitable Adjustment Proposal Submitted Under Contract TIR-93-
0025 for Service Center Recognition Image Processing System, OIG-
96-021, 12/12/95, $371,800 Q
Direct Labor and Indirect Expense Rates Submitted Under Contract
TIR-95-0059 for Treasury Information Process Support Services,
OIG-96-023, 12/28/95
Costs Incurred Under Contracts TIR-NA-92-05, TIR-93-MA-08, TIR-
SW-86-012, TIR-NA-90-029, TIR-SW-88-015, and TOS-88-021 for
Fiscal Year 1992, OIG-96-024, 1/26/96
Contract Closing Statement Under Contract TIR-90-0065 for Expert
Engineering Support Services, OIG-96-026, 2/1/96
Evaluation of Contractor's Labor Accounting System Internal
Controls, OIG-96-028, 2/5/96
Review of Hotline Complaint No. HL-96-009, Possible Improprieties
in Contract Payment, OIG-96-039, 3/4/96
Proposal Submitted in Response to Solicitation IRS-95-0027 for
Architect and Engineer Support Services, OIG-96-040, 3/7/96,
$197,000 S
Incurred Costs Under Contract TIR-93-0035 for Fiscal Years 1992
Through 1994, OIG-96-047, 3/21/96, $15,600 Q
Progress in Implementing the _IDRS Privacy and Security Action
Plan_, OIG-96-055, 3/29/96
U.S. Mint
Follow-Up of Accounting and Estimating System Deficiencies
Disclosed During Evaluation of Proposal Submitted Under Contract
TM-90-1022 for ADP Support Services, OIG-96-018, 11/28/95
Costs Incurred Under Contract TM-93-2000 for the James
Madison/Bill of Rights Commemorative Coin Program, OIG-96-027,
2/2/96, $127,100 Q
Costs Incurred Under Contract TM-92-2014 for the Christopher
Columbus Commemorative Coin Program, OIG-96-048, 3/27/96, $12,200
Q
Bureau of the Public Debt
Internal Controls Over Bond Production for the Bureau of the
Public Debt Are Adequate, OIG-96-008, 10/19/95
Independent Entity
Closure of the Thrift Depositor Protection Oversight Board Staff
Offices, OIG-96-032, 2/13/96
Inspection Service Audits
Internal Revenue Service
Electronic Return Originator Suitability Checks and Monitoring
Efforts, 060303, 10/12/95
Collection Field Function Productivity - Laguna Niguel District,
960103, 10/16/95
Vulnerability of Las Vegas Cash Remittances, 960204, 10/19/95
Planning and Implementation of the 1995 Taxpayer Compliance
Measurement Program, 060102, 10/25/95
Individual Return Transaction File - Austin District, 360100,
10/31/95
Implementation of the Electronic Tax Return Pilot, 060503,
11/1/95
Automated Collection System Activities - Mid-Atlantic Region,
660102, 11/1/95
Criminal Investigation Division's Controls Over Undercover
Operations, 060203, 11/3/95
Corporate Examination Productivity - Western Region, 960301,
11/8/95
Taxpayer Service 1995 Filing Season, 060607, 11/9/95
Implementation of Commitment Accounting - Western Region, 960402,
11/9/95
National Office Oversight Provided to the Service Centers During
the 1995 Filing Season, 060702, 11/14/95
Classified Waste Disposal - Austin Service Center, 360201,
11/28/95
General Corporate Examination Program Yields - Northeast Region,
660302, 12/5/95
Collection Field Function Initiatives to Reduce Cycle Time -
Central Region, 660201, 12/11/95
IRS Use of the Cooperative Administrative Support Program,
061205, 12/28/95, $174,000 S
FOCUS: An Automated System for Identifying Potential Civil and
Criminal Tax Violations, 061104, 1/2/96
Small Purchase Card Program - Western Region, 960501, 1/9/96
Internal Revenue Service Zapping Practices, 057301, 1/10/96
Productivity and Internal Controls of Blended Work Groups -
Aberdeen and Helena Districts, 360300, 1/12/96
Security in the Federal/State Electronic Filing Program, 061404,
1/17/96
Effectiveness of the Automated Substitute for Return Program,
060901, 1/19/96
TAXLINK Processing and Related Programs, 061509, 1/24/96
IRS' Efforts in Monitoring Trust Fund Recovery Penalty
Assessments Need Improvement, 061610, 1/24/96
Small Purchases Imprest Funds - Southeast Region, 160100, 1/24/96
Early Intervention Contact Processing, 060402, 1/30/96
On-Line Review Implementation of Processing Changes for the 1995
Revenue Protection Strategy, 060804, 2/9/96
Electronic Fraud Detection System Rollout, 061714, 2/12/96
The Totally Integrated Examination System, 061903, 2/13/96
Implementation of Installment Agreement User Fees, 061802,
2/14/96, $2,400,000 R
Use of Bank Secrecy Act Information for Tax Administration,
061003, 2/16/96, $20,000,000 S
High Risk Areas of the Travel Funds Program - Southeast Region,
160200, 2/21/96
Mailing Costs to the Service, 061302, 2/23/96
Distributed Input System Transition/Contingency Plan, 062208,
2/23/96
Service Center Recognition/Image Processing System Rollout,
062315, 2/28/96
Cost Management Information System, 062104, 2/29/96
Incentive Pay System - Austin Service Center, 360402, 2/29/96
Selected Aspects of the Service's Methodology for Developing Tax
Systems Modernization, 062403, 3/11/96
Midwest Region's Implementation of the Repeater Delinquency
Strategy, 360501, 3/18/96
Tax-Exempt Bond Program, 062604, 3/22/96
Development of the Revenue Accounting Control System Replacement,
062705, 3/22/96
Market Segment Specialization Program, 062004, 3/25/96
Dishonored Check Processing, 063001, 3/29/96
*** Last update 6/24/96 (sgb) ***_