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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

September 2014: 

Inspectors General: 

DHS OIG's Structure, Policies, and Procedures Are Consistent with 
Standards, but Areas for Improvement Exist: 

GAO-14-726: 

GAO Highlights: 

Highlights of GAO-14-726, a report to congressional committees. 

Why GAO Did This Study: 

The DHS OIG plays a critical role in strengthening accountability 
throughout DHS. The OIG received about $141 million in fiscal year 
2013 appropriations to carry out this oversight. 

The joint explanatory statement to the Department of Homeland Security 
Appropriations Act, 2013, directed GAO to review the OIG and its 
organizational structure for meeting independence standards. This 
report examines (1) the coverage the OIG's audits and inspections 
provided of DHS's component agencies, management challenges, and high-
risk areas; (2) the extent to which the OIG's organizational 
structure, roles, and responsibilities were consistent with the IG 
Act; and (3) the extent to which the design of the OIG's policies and 
procedures was consistent with applicable independence standards. 

To address these objectives, GAO obtained relevant documentation, such 
as selected reports and OIG policies and procedures, and compared this 
information to the IG Act and independence standards. GAO also 
interviewed officials from the OIG, DHS components, and the FBI. 

What GAO Found: 

During fiscal years 2012 and 2013, the Department of Homeland 
Security's (DHS) Office of Inspector General (OIG) issued 361 audit 
and inspection reports that collectively cover key components, 
management challenges identified by the OIG, and relevant high-risk 
areas identified by GAO. Of the 361 reports, 200 pertained solely to 
the Federal Emergency Management Agency (FEMA)-—the DHS component with 
the largest budget. Of those FEMA reports, 118 reports involved audits 
of disaster assistance grants. 

The OIG's organizational structure, roles, and responsibilities are 
generally consistent with the Inspector General (IG) Act of 1978, as 
amended (IG Act). In 2013, the OIG made changes to its structure to 
enhance independence and oversight, including establishing an Office 
of Integrity and Quality Oversight. However, areas for improvement 
exist for the OIG to better meet its responsibilities. 

* The OIG has not reached agreement with the Federal Bureau of 
Investigation (FBI) on coordinating and sharing border corruption 
information. The IG Act requires OIGs to recommend policies for and to 
conduct, supervise, or coordinate relationships with other federal 
agencies regarding cases of fraud or abuse. The Senate Appropriations 
Committee directed DHS to report jointly with the OIG and other DHS 
components on plans for working with the FBI. 

* The OIG lacks adequate controls to protect identities of employees 
filing complaints because its process for recording complaints 
involves significant manual procedures, without review, that can be 
subject to human error. The IG Act requires that OIGs not disclose the 
identity of an employee filing a complaint without the employee's 
consent unless such disclosure is unavoidable during the course of an 
investigation. The OIG is aware of these issues and is developing 
standard operating procedures. 

* The OIG does not have a policy for obtaining legal advice from its 
own counsel or guidelines specifying when it is appropriate to consult 
with the department's counsel. The former Acting IG requested legal 
help from a counsel at the department for 4 months, and it was not 
clear if this request was for appropriate matters. The IG Act requires 
the IG to obtain legal advice from a counsel reporting directly to the 
IG or another IG. The OIG Deputy Counsel has asked a working group to 
draft guidelines on consultations with the department's counsel. 

The OIG's policies and procedures are consistent with independence 
standards. However, OIG senior executives did not always comply with 
the policy to annually complete certificates of independence. Because 
the OIG does not centrally maintain the certifications, management's 
ability to monitor compliance is hindered. For example, no certificate 
of independence could be found for the former Acting IG. As a result 
of an impairment to the former Acting IG's independence that was not 
identified in a timely manner, the OIG had to reissue six reports for 
fiscal year 2012 to add an explanatory statement about the impairment. 
External peer reviews of the OIG's audit function, completed in 2009 
and 2012, also found that OIG staff, including senior executives, had 
not documented their independence as required. 

What GAO Recommends: 

GAO is making three recommendations for improving controls over 
processing complaints, obtaining legal advice, and monitoring 
compliance with independence standards. The IG concurred with GAO's 
recommendations and described actions being taken to address them. 

View [hyperlink, http://www.gao.gov/products/GAO-14-726]. For more 
information, contact Asif A. Khan at (202) 512-9869 or khana@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

DHS OIG's Audit and Inspection Reports Provided Coverage of Key 
Component Agencies, Management Challenges, and High-Risk Areas: 

Structure of DHS OIG Is Consistent with the IG Act, but Certain 
Policies and Procedures Could Be Improved: 

DHS OIG's Policies and Procedures Were Consistent with Applicable 
Independence Standards, but Effective Implementation Is Key: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Inspector General Quality and Independence Standards: 

Appendix III: DHS OIG's Policies and Procedures to Address Selected IG 
Act Requirements: 

Appendix IV: Comments from the Department of Homeland Security Office 
of Inspector General: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Department of Homeland Security (DHS) Components as of Fiscal 
Year 2013: 

Table 2: Department of Homeland Security (DHS) Office of Inspector 
General (OIG) Office Descriptions as of July 2014: 

Table 3: Office of Inspector General (OIG) Audit and Inspection 
Coverage of Department of Homeland Security (DHS) Components for 
Fiscal Years 2012 and 2013: 

Table 4: Office of Inspector General (OIG) Coverage of Department of 
Homeland Security (DHS) Management Challenges for Fiscal Years 2012 
and 2013: 

Table 5: Department of Homeland Security (DHS) Office of Inspector 
General (OIG) Coverage of High-Risk Areas for Fiscal Years 2012 and 
2013: 

Table 6: Department of Homeland Security (DHS) Office of Inspector 
General (OIG) Procedures to Address Selected Inspector General (IG) 
Act of 1978, as Amended (IG Act) Requirements: 

Figure: 

Figure 1: Department of Homeland Security (DHS) Office of Inspector 
General (OIG) Organization Chart (as of July 2014): 

Abbreviations: 

AIG: Assistant Inspector General: 

BCTF: border corruption task force: 

CBP: U.S. Customs and Border Protection: 

CIGIE: Council of the Inspectors General on Integrity and Efficiency: 

DHS: Department of Homeland Security: 

FBI: Federal Bureau of Investigation: 

FEMA: Federal Emergency Management Agency: 

GAGAS: generally accepted government auditing standards: 

ICE: U.S. Immigration and Customs Enforcement: 

IG: Inspector General: 

IG Act: Inspector General Act of 1978, as amended: 

IQO: Office of Integrity and Quality Oversight: 

MOU: memorandum of understanding: 

OIG: Office of Inspector General: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

September 24, 2014: 

Congressional Committees: 

The Department of Homeland Security's (DHS) Office of Inspector 
General (OIG) has a critical role in strengthening accountability 
throughout DHS and a responsibility to provide independent and 
objective oversight of the department's $91 billion in budgetary 
resources. To fulfill its accountability and oversight 
responsibilities, the DHS OIG conducts audits, inspections, and 
investigations of the department's programs and operations.[Footnote 
1] The Department of Homeland Security Appropriations Act, 2013, 
provided DHS OIG approximately $145 million in fiscal year 2013 
appropriations to fund these activities.[Footnote 2] 

To help ensure that the OIG's work is impartial and is viewed as such 
by DHS components, Congress, and the public, it is vital that the OIG 
maintain its independence, in fact and appearance. Moreover, the 
Inspector General (IG) Act of 1978, as amended (IG Act),[Footnote 3] 
requires that the OIG be independent and that it comply with 
Government Auditing Standards,[Footnote 4] which includes specific 
standards on independence. The joint explanatory statement 
accompanying the 2013 Department of Homeland Security Appropriations 
Act directed GAO to review the OIG's organizational structure and 
whether its audit, inspection, and investigation functions are 
organizationally structured to ensure that independence standards are 
met.[Footnote 5] To meet the committees' time frames, on November 8, 
2013, we briefed your committee staffs on our preliminary observations. 

This report provides the results of our review to determine (1) the 
coverage that the OIG's audits and inspections provided of DHS's key 
component agencies, management challenges, and high-risk areas; (2) 
the extent to which the OIG's organizational structure, roles, and 
responsibilities were consistent with the IG Act; and (3) the extent 
to which the design of the OIG's policies and procedures for planning, 
reviewing, and reporting on audit, inspection, and investigation 
results were consistent with applicable independence standards. To 
address our objectives, we reviewed the DHS agency financial report 
for fiscal years 2012 and 2013; the OIG's annual performance plans and 
semiannual reports for fiscal years 2012 and 2013, including major 
management challenges identified; and GAO's High-Risk Series for 2013. 
[Footnote 6] We compared the subjects of DHS OIG reports issued during 
fiscal years 2012 and 2013 with the department's key component 
agencies as well as with the management challenges and high-risk areas 
that were identified for the department. We reviewed the DHS OIG's 
organization charts, written policies and procedures, and internal 
inspection and peer review reports.[Footnote 7] We compared the OIG's 
organizational structure, roles, and responsibilities with selected IG 
Act requirements. We also compared the OIG's written policies and 
procedures with independence standards promulgated by Government 
Auditing Standards and the Council of the Inspectors General on 
Integrity and Efficiency (CIGIE).[Footnote 8] We interviewed officials 
from the OIG, DHS components, and the Federal Bureau of Investigation 
(FBI). 

We conducted this performance audit from June 2013 to September 2014 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. A more 
detailed explanation of our objectives, scope, and methodology can be 
found in appendix I. 

Background: 

On November 25, 2002, President Bush signed the Homeland Security Act 
of 2002, as amended, officially establishing DHS, with the primary 
mission of protecting the American homeland.[Footnote 9] DHS became 
operational on January 24, 2003. On March 1, 2003, under the 
President's reorganization plan, 22 agencies and approximately 181,000 
employees were transferred to the new department. 

DHS is currently organized into the components shown in table 1, seven 
of which are referred to as key operational components.[Footnote 10] 

Table 1: Department of Homeland Security (DHS) Components as of Fiscal 
Year 2013: 

Key operational components: Federal Emergency Management Agency; 
Other components: Domestic Nuclear Detection Office; 
Other components: Office of Inspector General. 

Key operational components: Transportation Security Administration; 
Other components: Federal Law Enforcement Training Center; 
Other components: Office of Intelligence and Analysis. 

Key operational components: U.S. Citizenship and Immigration Services; 
Other components: Management Directorate; 
Other components: Office of Legislative Affairs. 

Key operational components: U.S. Coast Guard; 
Other components: National Protection and Programs Directorate; 
Other components: Office of Operations Coordination and Planning. 

Key operational components: U.S. Customs and Border Protection; 
Other components: Office for Civil Rights and Civil Liberties; 
Other components: Office of Policy. 

Key operational components: U.S. Immigration and Customs Enforcement; 
Other components: Office of General Counsel; 
Other components: Privacy Office. 

Key operational components: U.S. Secret Service; 
Other components: Office of Health Affairs; 
Other components: Science and Technology Directorate. 

Source: DHS. GAO-14-726. 

[End of table] 

According to DHS, the seven key operational components lead the 
department's frontline activities to protect the nation. The other 
remaining DHS components provide resources, analysis, equipment, 
research, policy development, and support to ensure that the frontline 
organizations have the tools and resources to accomplish the DHS 
mission. The department's five key mission areas are (1) preventing 
terrorism and enhancing security, (2) securing and managing the 
nation's borders, (3) enforcing and administering the nation's 
immigration laws, (4) safeguarding and securing cyberspace, and (5) 
ensuring resilience to disasters. In fiscal year 2013, DHS had about 
226,000 full-time equivalent staff, and its budgetary resources 
totaled approximately $91 billion. 

DHS Office of Inspector General: 

Over three decades ago, Congress established independent IG offices 
throughout the federal government as a result of growing reports of 
serious and widespread internal control breakdowns resulting in 
monetary losses and reduced effectiveness or efficiency in federal 
activities. The IG Act established IG offices at major departments and 
agencies, including DHS, to prevent and detect fraud, waste, abuse, 
and mismanagement in their agencies' programs and operations; to 
conduct and supervise audits, inspections, and investigations; and to 
recommend policies to promote economy, efficiency, and effectiveness. 
As required by the IG Act, the DHS IG is presidentially appointed and 
confirmed by the Senate.[Footnote 11] The DHS OIG consists of several 
different component offices, as described in table 2. 

Table 2: Department of Homeland Security (DHS) Office of Inspector 
General (OIG) Office Descriptions as of July 2014: 

OIG office: Executive Office; 
Description: Consists of the Inspector General (IG), the Deputy IG, 
Chief of Staff, and a Special Assistant. It provides executive 
leadership to the OIG. From March 2013 through July 2014, it also 
included a Chief Operating Officer. 

OIG office: Office of Counsel; 
Description: Provides legal advice to the IG and OIG officials. 

OIG office: Office of Management; 
Description: Provides a complete array of administrative support 
functions to the OIG, including budget, personnel, and information 
technology. The office also prepares the OIG's annual performance plan 
and semiannual reports to Congress. 

OIG office: Office of Integrity and Quality Oversight (IQO); 
Description: Aims to improve the OIG's operations and enhance support 
of the DHS mission, programs, and operations. IQO manages the Hotline, 
Whistleblower Protection, and Ombudsman programs; compliance and 
quality assurance; and audit and inspection report quality. 

OIG office: Office of Audits; 
Description: Conducts and coordinates audits and program evaluations 
of the management and financial operations of DHS. 

OIG office: Office of Emergency Management Oversight; 
Description: Conducts audits to ensure that disaster relief funds are 
spent appropriately, while identifying fraud, waste, and abuse as 
early as possible. The office's focus is weighted heavily toward 
prevention, including reviewing internal controls, and monitoring and 
advising DHS and Federal Emergency Management Agency officials on 
contracts, grants, and purchase transactions before they are approved. 

OIG office: Office of Information Technology Audits; 
Description: Conducts audits and evaluations of DHS's information 
technology management, cyber infrastructure, systems integration, and 
systems privacy activities protections. 

OIG office: Office of Inspections; 
Description: Analyzes programs quickly to evaluate operational 
efficiency, effectiveness, and vulnerability. This work includes 
special reviews of sensitive issues that can arise suddenly and 
congressional requests for studies that require immediate attention. 

OIG office: Office of Investigations; 
Description: Investigates allegations of criminal, civil, and 
administrative misconduct involving DHS employees, contractors, 
grantees, and programs. These investigations can result in criminal 
prosecutions, fines, civil monetary penalties, administrative 
sanctions, and personnel actions. 

Source: DHS OIG. GAO-14-726. 

[End of table] 

IG Independence Requirements: 

The IG Act provides specific protections to IG independence that are 
necessary largely because of the unusual reporting requirements of the 
IGs, who are subject to the general supervision and budget processes 
of the agencies they audit while at the same time being expected to 
provide independent reports of their work to Congress. Protections to 
IG independence include a prohibition on the ability of the agency 
head to prevent or prohibit the IG from initiating, carrying out, or 
completing any audit or investigation. This prohibition is directed at 
helping to protect the OIG from external forces that could compromise 
its independence. Although these protections apply to the DHS OIG, 
exceptions exist for the Secretary of DHS when certain sensitive 
information or situations are involved.[Footnote 12] The IG's personal 
independence and the need to appear independent to knowledgeable third 
parties is also critical when the IG makes decisions related to the 
nature and scope of audit and investigative work performed by the OIG. 

An independent and reliable OIG structure firmly established at 
federal agencies is important for ensuring effective oversight of 
programs and operations. Auditors who work for OIGs are required to 
adhere to independence standards included in Government Auditing 
Standards, also known as generally accepted government auditing 
standards.[Footnote 13] Government Auditing Standards states that an 
audit organization and individual auditor must be free from 
impairments to independence and must avoid the appearance of an 
impairment. Auditors and audit organizations must maintain 
independence so that their opinions, findings, conclusions, judgments, 
and recommendations will be impartial and be viewed as impartial by 
objective third parties with knowledge of the relevant information. 
This requires staff to act with integrity, exercise objectivity and 
professional skepticism, and avoid circumstances or threats to 
independence that would cause a reasonable and informed third party to 
believe that an OIG's work had been compromised. 

In addition, to the extent legally permitted and not inconsistent with 
Government Auditing Standards, federal OIGs are required, as 
appropriate, to adhere to the quality standards promulgated by CIGIE. 
[Footnote 14] These standards include requirements for OIGs, including 
OIG employees who work on investigations and inspections, to maintain 
their independence. For additional information on quality and 
independence standards for OIGs, see appendix II. 

DHS OIG's Audit and Inspection Reports Provided Coverage of Key 
Component Agencies, Management Challenges, and High-Risk Areas: 

During fiscal years 2012 and 2013, the DHS OIG issued 361 audit and 
inspection reports.[Footnote 15] These reports provided coverage of 
all DHS key operational components, management challenges, and high-
risk areas. According to the OIG, the majority of its audits and 
inspections were performed in response to congressional mandates or 
requests, while others were planned by the OIG based on factors such 
as the department's strategic plan, which identifies strategic 
missions and priorities, and by the OIG's annual performance plan and 
major management challenges identified for the department. 

OIG Reports Covered All DHS Key Components: 

Our review of issues addressed in the DHS OIG's audit and inspection 
reports issued during fiscal years 2012 and 2013 found that the OIG 
provided oversight of all components that DHS has identified as its 
key operational components. In addition, several OIG reports covered 
other DHS components, multiple components, and department-wide issues, 
as shown in table 3. 

Table 3: Office of Inspector General (OIG) Audit and Inspection 
Coverage of Department of Homeland Security (DHS) Components for 
Fiscal Years 2012 and 2013: 

Key operational components: 

DHS component: Federal Emergency Management Agency; 
Number of audit reports[A]: 200; 
Number of inspection reports: 0; 
Total: 200. 

DHS component: Transportation Security Administration; 
Number of audit reports[A]: 25; 
Number of inspection reports: 9; 
Total: 34. 

DHS component: U.S. Customs and Border Protection; 
Number of audit reports[A]: 26; 
Number of inspection reports: 1; 
Total: 27. 

DHS component: U.S. Coast Guard; 
Number of audit reports[A]: 16; 
Number of inspection reports: 0; 
Total: 16. 

DHS component: U.S. Immigration and Customs Enforcement; 
Number of audit reports[A]: 11; 
Number of inspection reports: 4; 
Total: 15. 

DHS component: U.S. Citizenship and Immigration Service; 
Number of audit reports[A]: 9; 
Number of inspection reports: 2; 
Total: 11. 

DHS component: U.S. Secret Service; 
Number of audit reports[A]: 1; 
Number of inspection reports: 1; 
Total: 2. 

DHS component: Other components; 
Number of audit reports[A]: 18; 
Number of inspection reports: 6; 
Total: 24. 

DHS component: Multiple component reports; 
Number of audit reports[A]: 18; 
Number of inspection reports: 3; 
Total: 21. 

DHS component: Departmental/department-wide issues; 
Number of audit reports[A]: 11; 
Number of inspection reports: 0; 
Total: 11. 

DHS component: Total; 
Number of audit reports[A]: 335; 
Number of inspection reports: 26; 
Total: 361. 

Source: GAO analysis of DHS OIG reports issued in fiscal years 2012 and 
2013. GAO-14-726. 

[A] Audit reports include reports from the OIG Offices of Audits, 
Information Technology Audits, and Emergency Management Oversight. 

[End of table] 

As table 3 illustrates, the majority of the OIG's audit and inspection 
reports issued in fiscal years 2012 and 2013 addressed issues at the 
Federal Emergency Management Agency (FEMA). Specifically, 200 of these 
reports (55 percent) pertained solely to FEMA. Of these 200 reports, 
166 reports involved audits of FEMA grants, including 118 reports on 
Disaster Assistance Grants. According to OIG officials, the large 
number of FEMA audits can be attributed to a number of factors. For 
example, the OIG has a statutory mandate to annually conduct audits of 
a sample of states and high-risk urban areas that receive grants 
administered by DHS to prevent, prepare for, protect against, or 
respond to natural disasters, acts of terrorism, and other disasters. 
[Footnote 16] In addition, FEMA's programs are considered to have a 
higher financial risk than those of other DHS components because it 
distributes disaster relief funds to so many communities nationwide--
for example, as of May 2014, over 135,000 applicants (e.g., local 
governments and nonprofit organizations to which public assistance 
funds are awarded) were receiving disaster assistance. Moreover, FEMA 
has the largest budget of all DHS components, with total budgetary 
resources of over $36 billion for fiscal year 2013, or about 38 
percent of the department's total budget. In addition, the OIG 
received $27 million from the Disaster Relief Fund in fiscal year 2013 
specifically for conducting audits and investigations related to 
disasters.[Footnote 17] 

OIG Reports Covered All Reported DHS Management Challenges and High-
Risk Areas: 

Of the 361 audit and inspection reports issued during fiscal years 
2012 and 2013, we found that 355 OIG reports pertained to the 
department's management challenges reported by the OIG. OIGs began 
annually identifying management challenges (i.e., what the IG 
considers to be the most serious management and performance challenges 
facing the agency) for their respective departments or agencies in 
1997 at the request of Congress and continue to do so based on 
requirements of the Reports Consolidation Act of 2000.[Footnote 18] 
The act requires executive agencies to include their IGs' lists of 
significant management challenges in their annual performance and 
accountability reports to the President, the Office of Management and 
Budget, and Congress. DHS reports this information in its annual 
agency financial report. As shown in table 4, the OIG reports issued 
during fiscal years 2012 and 2013 covered all nine management 
challenges identified for that time period. 

Table 4: Office of Inspector General (OIG) Coverage of Department of 
Homeland Security (DHS) Management Challenges for Fiscal Years 2012 
and 2013: 

Management challenge: Grants Management[B]; 
Number of audit reports[A]: 177; 
Number of: inspection reports: 0; 
Total: 177. 

Management challenge: Financial Management; 
Number of audit reports[A]: 73; 
Number of: inspection reports: 0; 
Total: 73. 

Management challenge: Information Technology Management; 
Number of audit reports[A]: 28; 
Number of: inspection reports: 0; 
Total: 28. 

Management challenge: Border Security; 
Number of audit reports[A]: 13; 
Number of: inspection reports: 8; 
Total: 21. 

Management challenge: Transportation Security; 
Number of audit reports[A]: 9; 
Number of: inspection reports: 9; 
Total: 18. 

Management challenge: Emergency Management; 
Number of audit reports[A]: 16; 
Number of: inspection reports: 1; 
Total: 17. 

Management challenge: Acquisition Management; 
Number of audit reports[A]: 15; 
Number of: inspection reports: 1; 
Total: 16. 

Management challenge: Trade Operations and Security; 
Number of audit reports[A]: 3; 
Number of: inspection reports: 0; 
Total: 3. 

Management challenge: Infrastructure Protection; 
Number of audit reports[A]: 0; 
Number of: inspection reports: 2; 
Total: 2. 

Management challenge: Total; 
Number of audit reports[A]: 334; 
Number of: inspection reports: 21; 
Total: 355. 

Source: GAO analysis of DHS OIG reports issued in fiscal years 2012 and 
2013. GAO-14-726. 

[A] Audit reports include reports from the OIG Offices of Audits, 
Information Technology Audits, and Emergency Management Oversight. 

[B] The 177 reports related to grants management include 166 related 
to Federal Emergency Management Agency (FEMA) grants and whether 
grantees or subgrantees accounted for and expended FEMA funds 
according to federal regulations and FEMA guidelines. 

[End of table] 

As shown in table 4, other than reports on FEMA grants, the majority 
of DHS OIG reports covered Financial Management and Information 
Technology Management. Reports in these subject areas made up over 
half of all the non-FEMA reports released by the OIG in fiscal years 
2012 and 2013. Conversely, Trade Operations and Security and 
Infrastructure Protection received the least coverage. An OIG official 
noted that resource constraints, mandatory workload, and requested 
work affect the schedule and completion of work. 

We also compared the subjects of the 361 audit and inspection reports 
issued during fiscal years 2012 and 2013 to the high-risk areas 
reported by GAO. Since 1990, GAO has periodically reported on 
government operations that we have designated as high risk because of 
their greater vulnerabilities to fraud, waste, abuse, and 
mismanagement. In February 2013, we reported two high-risk areas that 
apply specifically to DHS and two other high-risk areas that pertain 
to DHS and other federal agencies and departments.[Footnote 19] As 
shown in table 5, we found that 177 OIG reports pertained to at least 
one of these four high-risk areas. 

Table 5: Department of Homeland Security (DHS) Office of Inspector 
General (OIG) Coverage of High-Risk Areas for Fiscal Years 2012 and 
2013: 

GAO high-risk area: Strengthening DHS Management Functions; 
Number of audit reports[A]: 109; 
Number of inspection reports: 10; 
Total: 119. 

GAO high-risk area: Establishing Effective Mechanisms for Sharing and 
Managing Terrorism-Related Information to Protect the Homeland; 
Number of audit reports[A]: 36; 
Number of inspection reports: 13; 
Total: 49. 

GAO high-risk area: Protecting the Federal Government's Information 
Systems and the Nation's Cyber Critical Infrastructures; 
Number of audit reports[A]: 6; 
Number of inspection reports: 1; 
Total: 7. 

GAO high-risk area: National Flood Insurance Program; 
Number of audit reports[A]: 2; 
Number of inspection reports: 0; 
Total: 2. 

GAO high-risk areas: Total; 
Number of audit reports[A]: 153; 
Number of inspection reports: 24; 
Total: 177. 

Source: GAO analysis of DHS OIG reports issued in fiscal years 2012 and 
2013. GAO-14-726. 

[A] Audit reports include reports from the OIG Offices of Audits, 
Information Technology Audits, and Emergency Management Oversight. 

[End of table] 

According to these data, the high-risk area of Strengthening DHS 
Management Functions received the most coverage in DHS OIG reports 
issued in fiscal years 2012 and 2013. This issue, which has been on 
the high-risk list since the department was established in 2003, 
encompasses a wide range of functions, including acquisition, 
information technology, financial and human capital management, and 
management integration.[Footnote 20] The other high-risk issue that 
pertains solely to DHS, the National Flood Insurance Program, has been 
on the high-risk list since 2006. According to OIG officials, the 
coverage of this issue has been limited because GAO has performed a 
significant body of work and issued a number of reports in this area 
over the last decade and the OIG did not want to duplicate efforts. 
[Footnote 21] The two high-risk issues that pertain to other federal 
agencies in addition to DHS--(1) Establishing Effective Mechanisms for 
Sharing and Managing Terrorism-Related Information to Protect the 
Homeland and (2) Protecting the Federal Government's Information 
Systems and the Nation's Cyber Critical Infrastructures--have been on 
the high-risk list since 2005 and 1997, respectively. 

Structure of DHS OIG Is Consistent with the IG Act, but Certain 
Policies and Procedures Could Be Improved: 

The DHS OIG's organizational structure includes all of the positions 
required by the IG Act, as well as several nonstatutory positions that 
help the OIG carry out its responsibilities. According to the OIG, 
changes to the OIG's structure made during fiscal year 2013 were 
intended to help further strengthen its organizational independence. 
The OIG also has policies and procedures designed to carry out most of 
the responsibilities required by the IG Act. However, we identified 
three areas--coordinating with the FBI, protecting employees' 
identities, and obtaining legal advice--in which the OIG's policies 
and procedures could be improved to better meet its responsibilities. 

DHS OIG Organizational Structure Is Consistent with Provisions of the 
IG Act: 

The IG Act requires that each OIG have certain specific positions in 
its organization. First, for cabinet departments and certain major 
agencies, it requires that each OIG be headed by an IG appointed by 
the President and confirmed by the Senate.[Footnote 22] The act also 
requires that each IG appoint or designate certain other positions, 
including: 

* an Assistant IG (AIG) for Audits, 

* an AIG for Investigations, and: 

* a Whistleblower Protection Ombudsman.[Footnote 23] 

The IG Act also requires that each IG obtain legal advice from a 
counsel either reporting directly to the IG or to another IG. In 
addition, a special provision for the DHS OIG requires the IG to 
designate a senior official to carry out responsibilities related to 
receiving and investigating complaints that allege abuses of civil 
rights or civil liberties. 

The DHS OIG has all of the positions required by the IG Act, which are 
highlighted in the OIG's organization chart in figure 1. 

Figure 1: Department of Homeland Security (DHS) Office of Inspector 
General (OIG) Organization Chart (as of July 2014): 

[Refer to PDF for image: Organization Chart] 

Top level: Inspector General[C]; 
* Chief of Staff; 
* Counsel[C]; 
* Deputy Inspector General: 
- Chief Operating Officer (March 2013-July 2014). 

Second level, reporting upward: Assistant Inspectors General: 
* Audits[C]; 
* Emergency Management Oversight; 
* Information Technology Audits; 
* Inspections; 
* Integrity and Quality Oversight[A]; 
* Investigations[B][C]; 
* Management. 

Source: DHS OIG. GAO-14-726. 

[A] The Whistleblower Protection Ombudsman, required by the Inspector 
General Act of 1978, as amended (IG Act), is a position within the 
Office of Integrity and Quality Oversight. 

[B] The Assistant Inspector General for Investigations has also been 
designated as the senior official having responsibilities related to 
allegations of civil rights and civil liberties abuses, a position 
required by the IG Act. 

[End of figure] 

For example, the DHS OIG has its own Office of Counsel, which is 
currently headed by a Deputy Counsel to the IG. Furthermore, in 
January 2012, the OIG issued a policy directive that designated the 
position of the AIG for Investigations as the Civil Rights and Civil 
Liberties Coordinator for investigative matters. In November 2012, the 
former Acting IG designated an individual within the Office of 
Investigations as the acting Whistleblower Protection Ombudsman with a 
goal of improving the availability of whistleblower protection 
information to employees throughout the department. In August 2013, 
after this function was transferred to the Office of Integrity and 
Quality Oversight (IQO), the same person became the permanent 
Whistleblower Protection Ombudsman. 

The DHS OIG has created several other senior positions in addition to 
those required by the IG Act, which are also shown in figure 1. As of 
July 2014, these positions include the Deputy IG and Chief of Staff 
within the OIG executive office, who provide executive leadership to 
the OIG. In addition, the OIG has AIGs to lead its Offices of 
Emergency Management Oversight, Information Technology Audits, 
Inspections, Integrity and Quality Oversight, and Management. As 
discussed further below, the Deputy IG position has been vacant since 
December 2013 and all of the AIGs report directly to the IG as of July 
2014. 

Several Key OIG Positions Had Extended Vacancies: 

While the OIG's organizational structure appears reasonable and 
includes the positions required by the IG Act, at the time of our 
audit, several of its key positions had not been filled with permanent 
employees for extended periods of time or had only recently been 
filled. In November 2013, the Senate held a hearing related to this 
issue in which the Ranking Member of the Subcommittee on Efficiency 
and Effectiveness of Federal Programs and the Federal Workforce, 
Committee on Homeland Security and Governmental Affairs noted that 
vacancies in the IG and several key OIG positions left the agency 
without proper leadership.[Footnote 24] For example, the IG position 
was either occupied by an acting IG or vacant from February 27, 2011, 
through March 5, 2014. Specifically, with the former IG's resignation 
in February 2011, the Secretary designated the Deputy IG as the Acting 
IG who served in that position until January 2013, when he reached the 
statutory time limit for serving as an acting officer.[Footnote 25] At 
that point, the Acting IG reverted back to the title of Deputy IG, 
while still remaining the de facto head of the OIG. Because the Deputy 
IG was the head of the organization during that time, a Chief 
Operating Officer position was created in March 2013 to assume the 
functions that would otherwise be carried out by the Deputy IG when 
the IG position was filled. The Deputy IG once again became Acting IG 
in November 2013, when an IG was nominated, until his resignation in 
December 2013. Upon the Acting IG's resignation, the Chief Operating 
Officer served as the head of the OIG until a new IG was confirmed by 
the Senate on March 6, 2014, and assumed the post on March 10, 2014. 
The Chief Operating Officer retired in April 2014 and the position was 
eliminated in July 2014. 

Other executive positions within the OIG were also filled by acting 
staff for extended periods, including the following: 

* The Counsel to the IG had been vacant and filled by an Acting 
Counsel since December 2012 and remained so as of September 2014. 

* The AIG for Investigations was acting for 1 year before becoming 
permanent in May 2013. 

* The Office of Inspections has had an Acting or vacant AIG position 
since August 2012, except for approximately 2-½ months in early 2013 
when it had an AIG.[Footnote 26] 

Changes to Organizational Structure Are Intended to Improve OIG 
Independence: 

In January 2013, the OIG's Office of Management evaluated the 
organizational structure of the OIG in regard to critical issues it 
was facing, including two situations that occurred in 2011 and 2012 
that potentially threatened the credibility and independence of the 
OIG. One incident, which is detailed later in this report, arose from 
a conflict of interest with the former Acting IG, who had a family 
member who worked for a DHS unit associated with six audits or 
inspections, and required the reissuance of the associated reports. As 
a result of the OIG's Office of Management's study of this incident, 
the Chief Operating Officer position was created, as previously 
mentioned, to take on the normal duties of the second-in-command while 
either the Deputy IG or IG position was vacant. This included 
reviewing reports from which the former Acting IG had recused himself 
in order to avoid future conflicts of interest and to improve OIG 
independence. 

The second incident resulted from a lack of independence of an 
inspection team from the Office of Investigations that was conducting 
an internal inspection of an Office of Investigations field office in 
September 2011. The Department of Justice subsequently investigated 
this incident, and a grand jury issued an indictment in April 2013 
against two employees in the Office of Investigations field office. 
The defendants were accused of falsifying documents prior to the 
internal inspection in order to impede, obstruct, and influence the 
inspection and conceal from the inspectors severe lapses in the field 
office's compliance with the OIG's investigative standards and 
internal policies. In March 2014, a federal court found one of the 
employees guilty of conspiracy and five counts of falsifying 
government documents. As a result of the OIG's Office of Management's 
study related to this incident, the DHS OIG established IQO in the 
summer of 2013 to enhance its organizational independence and 
oversight of its operations. According to OIG officials, this office 
was established to foster a more efficient and responsive OIG, 
revitalize oversight efforts, and better serve employees. At the time 
of our review, IQO was taking over various quality control functions 
previously carried out by other OIG offices. Specifically, IQO was 
given responsibility for the following functions: 

* Internal inspections of the OIG's audit, inspection, and 
investigation offices, which were previously conducted by the Offices 
of Management and Investigations. 

* Quality review of draft audit and inspection reports, which was 
previously done primarily by a report reviewer in the executive 
office. The same individual will continue reviewing reports but is now 
part of IQO. 

* Complaint intake, including the OIG hotline and whistleblower 
protection functions, which was previously conducted by the Office of 
Investigations. 

* Ombudsman for OIG employees, which was also previously under the 
Office of Investigations and at that time was only set up to address 
concerns of Office of Investigations personnel. 

OIG officials indicated that the Hotline and Whistleblower Protection 
functions would be in a better position to protect confidentiality and 
have better visibility if they were separate from the Office of 
Investigations as is the case in many similar organizations. In 
addition, IQO officials said that they were taking steps to strengthen 
both the Ombudsman and Whistleblower Protection functions by 
developing formal policies for these positions and providing training 
about these functions to the entire department. The establishment of 
IQO is a positive step toward improving the OIG's organizational 
independence for the reasons cited by the OIG and because it provides 
a separation of duties where independence problems previously existed. 

DHS OIG's Roles and Responsibilities Are Generally in Accordance with 
the IG Act: 

The DHS OIG's policies and procedures contained in its manuals and 
directives indicate that the OIG's roles and responsibilities are 
generally consistent with selected requirements of the IG Act. 
Provisions of the IG Act include requirements that IGs carry out the 
following responsibilities, among others: [Footnote 27] 

* Conduct audits and investigations related to department programs and 
operations. 

* Receive and investigate complaints or information from DHS employees 
regarding possible violations of law, rules, or regulations, or 
mismanagement, waste, abuse, or substantial danger to public health 
and safety. 

* Maintain oversight responsibility for internal investigations 
performed by DHS components, such as the U.S. Secret Service, U.S. 
Immigration and Customs Enforcement (ICE), and U.S. Customs and Border 
Protection (CBP). 

* Establish and maintain a direct link on the home page of the OIG 
website for individuals to report fraud, waste, and abuse. 

* Recommend policies for, and conduct, supervise, or coordinate 
activities for, promoting economy, efficiency, and effectiveness in 
the administration of the department's programs and operations or 
preventing and detecting fraud and abuse. 

* Report expeditiously to the Attorney General whenever the IG has 
reasonable grounds to believe there has been a violation of federal 
criminal law. 

As discussed further in appendix III, we found that the DHS OIG had 
established policies and procedures to carry out these and other 
selected requirements of the IG Act. Specifically, the OIG had manuals 
containing detailed policies and procedures to follow in carrying out 
its audits, inspections, and investigations. For example, the manual 
for the Office of Investigations--the Special Agent Handbook--included 
policies and procedures for receiving and investigating complaints. 

While most of the OIG's roles and responsibilities are consistent with 
the IG Act, we identified three areas--coordinating with the FBI, 
protecting employees' identities, and obtaining legal advice--in which 
the OIG could improve its policies and procedures to be more effective 
in meeting the OIG's mission objectives. 

OIG Lacks Agreement with the FBI for Coordination on Border Corruption 
Investigations: 

Although the OIG has a policy for notifying the FBI of any criminal 
investigations that it or another DHS component opens, it does not 
have an agreement with the FBI for sharing other information or 
otherwise coordinating efforts with the FBI on tips or allegations 
related to border corruption that are not under investigation. 
[Footnote 28] The IG Act requires OIGs to recommend policies for, and 
to conduct, supervise, or coordinate relationships between, the OIG 
and other federal agencies with respect to the identification and 
prosecution of participants in fraud or abuse. According to Attorney 
General Guidelines, OIGs have primary responsibility for preventing 
and detecting waste and abuse and concurrent responsibility with the 
FBI for preventing and detecting fraud and other criminal activity 
within their agencies and their agencies' programs.[Footnote 29] 

Congress has repeatedly expressed concern about border corruption and 
has held hearings on this issue. For example, in June 2011, the Senate 
held a hearing on CBP and the OIG's collaboration in the fight to 
prevent border corruption.[Footnote 30] The hearing included a 
discussion of OIG efforts to work with the FBI as well as CBP in 
preventing corruption among federal employees involved in protecting 
the U.S. borders. To investigate corruption among employees of 
agencies involved in protecting the U.S. border, the FBI has 
established several local border corruption task forces (BCTF), many 
of which operate along the southwest border. The OIG participates in 
local BCTFs both in the southwest and other locations. In addition, 
the FBI established the National BCTF to help provide guidance and 
oversight of the local BCTFs. To facilitate the operation of the 
National BCTF, in 2010, the FBI signed a memorandum of understanding 
(MOU) with CBP and the Transportation Security Administration. 
Although the OIG has agents assigned to the BCTFs, OIG officials 
stated that they did not sign this MOU because the ongoing dialogue 
has not yielded an agreement that recognizes the OIG's statutory 
authority and adequately delineates the roles and responsibilities of 
all parties involved, including the DHS components. OIG officials also 
stated that they could not reach agreement on sharing information with 
the FBI because, in their view, the proposed agreement was not 
sufficient to ensure mutual information sharing between the OIG and 
the FBI. 

Since at least 2010, the OIG and FBI have been working to reach 
agreement on an MOU to describe how the parties would work together, 
along with other DHS components, on the National BCTF. OIG officials 
told us that since a permanent AIG for Investigations was designated 
in May 2013, he has been making efforts to improve relationships. For 
example, the AIG for Investigations has had more meetings with the FBI 
and DHS components involved in the National BCTF, such as CBP and ICE, 
to discuss coordination and information-sharing efforts as well as 
ways to reach agreement on a BCTF MOU. The AIG for Investigations is 
also in support of the National BCTF and is working diligently with 
the FBI to reach an agreement, but stated that he believes that the 
information to be shared needs to be clearly defined and that the FBI 
must also agree to share information. 

Until the OIG and FBI reach agreement on working collaboratively, they 
are at risk of duplicating efforts or missing opportunities for taking 
effective action against border corruption. Recognizing this risk, the 
Senate Committee on Appropriations report for the DHS appropriations 
bill, 2014, directed the DHS Deputy Secretary--jointly with the OIG, 
CBP, and ICE--to report not later than March 17, 2014, on specific 
steps being taken to further address the process for investigating 
cases of corruption and the plan to work as a unified DHS with the 
FBI's BCTF.[Footnote 31] In addition, the Senate Committee on 
Appropriations report for the DHS appropriations bill, 2015, directed 
the DHS Deputy Secretary--jointly with the OIG, CBP, and ICE--to 
submit a status update report on the same issues no later than 60 days 
after the enactment of the DHS Appropriation Act, 2015.[Footnote 32] 

OIG Lacks Adequate Controls to Protect Identities of Employees Filing 
Complaints: 

The OIG receives and reviews complaints filed by DHS employees and the 
public regarding allegations of misconduct, including criminal 
misconduct, by DHS employees. It receives these complaints both 
directly from employees as well as through DHS components, where some 
complaints are initially filed. However, the OIG's process for 
handling complaints that it receives directly from employees does not 
include adequate internal controls to provide reasonable assurance 
that the identities of employees who file complaints and request 
confidentiality will be protected. The IG Act requires that IGs shall 
not, after receipt of a complaint or information from an employee, 
disclose the identity of the employee without his or her consent 
unless the IG determines that such disclosure is unavoidable during 
the course of an investigation. Consistent with the IG Act, OIG policy 
requires not disclosing the identities of employees who file 
complaints. However, the OIG's process for recording complaints and 
forwarding them to DHS components when necessary involves certain 
manual procedures usually carried out by only one OIG complaint intake 
employee per complaint without supervisory review. This process can be 
subject to human error; consequently, the OIG is at higher risk of not 
being able to ensure that employees' identities will be protected. 

During fiscal year 2013, according to OIG data provided to us, about 
50 percent of the complaints received by the OIG came through the 
Joint Intake Center run by CBP and ICE and another 6 percent were 
received from other DHS components. The rest of the complaints were 
received directly from complainants through the OIG's website or by e-
mail, fax, or phone. Complaints received through the website (about 15 
percent) are automatically recorded into the OIG's complaint database, 
the Enforcement Data System, while complaints received through all 
other means, including those from the Joint Intake Center, must be 
manually recorded in the Enforcement Data System. 

Although the transfer of complaint information from the OIG's website 
into the Enforcement Data System is more automated than complaints 
from other sources, the website lacks certain controls that could 
result in the inadvertent disclosure of employees' identities. For 
example, when filing a complaint on the website, if an employee does 
not want to allow full disclosure of his or her identity, an employee 
can choose to be (1) anonymous or (2) confidential. However, the 
website lacks certain controls over these two categories. For example, 
see the following: 

* The anonymous category is intended to mean that the complainant does 
not have to supply any identifying information. To select anonymous, a 
complainant can check a box on the website. However, after 
complainants make this selection, the website still allows 
complainants to provide their names and other personal information, 
which could potentially be disclosed. 

* The confidential category is intended to mean the employee provides 
identifying information but does not want it released outside of the 
OIG. If an employee wants confidentiality rather than anonymity, the 
employee must write in the request for confidentiality on the website 
form because the website does not have a box to check for this type of 
complaint. As a result, even though the Enforcement Data System 
includes a "complaint confidential" box, a request for confidentiality 
on the website does not automatically record this request in the 
Enforcement Data System. Therefore, requests for confidentiality 
depend on the analyst who subsequently reviews the complaint manually 
marking the correct box in the system. 

Regardless of how a complaint is received, when a complaint is 
recorded in the Enforcement Data System, it is initially reviewed by a 
complaint intake analyst who determines if the complaint should be 
forwarded to a field office of the OIG Office of Investigations in the 
complainant's jurisdiction. If it is forwarded, an OIG investigator in 
that office reviews the complaint and decides whether to open an 
investigation on it. If the OIG decides not to investigate the 
complaint, and the complaint was received through the Joint Intake 
Center or another DHS component, a complaint intake analyst will 
usually send it back to the component without first notifying the 
complainant since the component has already had access to the 
complaint information. However, if the complaint was received directly 
from an employee rather than through a DHS component (e.g., OIG 
website, e-mail, fax, or phone), the intake analyst will send an e-
mail to the employee requesting his or her consent to forward the 
complaint to the DHS component. If the employee provides consent, the 
analyst forwards the complaint to the component via e-mail. If an 
employee does not provide consent, the complaint may still be sent to 
the component but without any identifying information. However, there 
is no secondary check of this manual process, such as a supervisory 
review. As a result, the protection of an employee's identity depends 
on the accuracy and integrity of the individual processing the 
complaint. Without additional controls, the OIG could inadvertently 
disclose employees' identities without their consent. Such disclosure 
can put employees at risk of retaliation by the DHS components in 
which they work and could discourage other employees from filing 
complaints. Officials in IQO said that they were aware of these issues 
and that they were developing standard operating procedures and 
considering improvements to the website and the Enforcement Data 
System to better protect employees' identities, but they did not 
indicate when these would be complete. 

OIG Lacks Guidelines for Obtaining Legal Advice: 

While the OIG has its own Office of Counsel, it sometimes also obtains 
advice or discusses legal issues with the department's counsel. As 
previously discussed, the IG Act requires that an IG obtain legal 
advice from either a counsel reporting directly to the IG or a counsel 
reporting to another IG. However, the act does not preclude an IG from 
obtaining advice from its respective department's counsel if 
appropriate. For example, it may be appropriate for the IG to consult 
the department's counsel for legal advice regarding certain personnel 
practices if the OIG is subject to the human capital laws or 
regulations of the department or regarding ethics issues if the 
designated ethics official is a department employee. 

In its recent report on an investigation into allegations of 
misconduct by the former Acting IG, the Subcommittee on Financial and 
Contracting Oversight, Senate Committee on Homeland Security and 
Governmental Affairs, reported that the former Acting IG 
inappropriately sought advice from the department's counsel, according 
to former OIG officials.[Footnote 33] We interviewed former and 
current OIG officials and reviewed various e-mails provided that 
indicated the former Acting IG sought legal advice from a counsel at 
the department on several occasions. In general, we found the 
consultations were likely acceptable and appropriate as the legal 
matter appeared to be under the department's purview. However, in one 
e-mail the former Acting IG stated that he had lost confidence in his 
counsel and wanted legal help from a counsel at the department for the 
next 4 months. Because the former Acting IG's request did not specify 
the type of legal assistance needed, it was not clear whether his 
request or any subsequent legal assistance received was for 
appropriate matters. The OIG did not have a policy stating the legal 
requirement for the IG to obtain legal advice from either the IG's 
counsel or from counsel reporting to another IG, nor did it have any 
guidelines specifying the circumstances in which it would be 
appropriate for the OIG to consult with the department's counsel. 
Having such a policy and guidelines could help avoid any potential 
impairment to independence when seeking legal advice. The OIG's Deputy 
Counsel stated that he was considering whether to develop a policy and 
that he has asked a working group to draft guidelines on consultations 
between the OIG and the department's counsel. 

DHS OIG's Policies and Procedures Were Consistent with Applicable 
Independence Standards, but Effective Implementation Is Key: 

Independence is one of the most important elements of a strong OIG 
function as it helps to ensure that an IG's work is viewed as 
impartial by agency personnel, Congress, and the public. The DHS OIG's 
policies and procedures indicated that the OIG staff were expected to 
comply with both generally accepted government auditing standards 
(GAGAS) and CIGIE independence standards. Each of the OIG's oversight 
functions--audits, inspections, and investigations--had its own manual 
of policies and procedures that was consistent with applicable 
independence standards. However, the procedures for ensuring 
compliance with these standards varied among the different functions. 

Audit Policies and Procedures Were Consistent with Independence 
Standards but Have Not Been Consistently Followed: 

Three offices within the DHS OIG conduct audits--the Offices of 
Audits, Information Technology Audits, and Emergency Management 
Oversight. Officials from each of these offices said that their 
operations are guided by DHS's OIG Audit Manual, which refers to GAGAS 
and CIGIE independence standards and provides guidance consistent with 
these standards. In addition, each of their audit reports includes a 
statement about the audit's compliance with GAGAS. 

The OIG Audit Manual describes the OIG's quality assurance and control 
system that, according to the manual, provides the controls necessary 
to ensure that GAGAS audits are conducted in accordance with 
applicable auditing standards and internal policies and guidance. For 
example, the manual requires supervisory and management reviews of 
audit documentation and resulting reports prior to issuance. The 
manual states that the AIG for each audit office is responsible for 
ensuring implementation of these controls. Other parts of the OIG's 
quality control system described in the manual include annual internal 
quality control reviews of audit offices and reports, as well as 
external peer reviews of audit operations by an independent federal 
OIG at least once every 3 years. 

The OIG Audit Manual describes how OIG audit staff should document 
their independence. For auditors at the director level and below, the 
manual requires staff to document their independence biweekly in the 
OIG's Time and Tracking System. For senior executives, including the 
IG, Deputy IG, Chief of Staff, AIGs, and others involved in reviewing 
audit reports, the manual requires documentation of their independence 
once a year when they complete ethics training and financial 
disclosure forms.[Footnote 34] The manual further states that each 
office will maintain these annual certifications of independence, but 
does not require the certifications to be centrally maintained and 
monitored for compliance. Procedures for each of the three audit 
offices regarding annual certificates varied. For example, the Office 
of Audits said that it maintained annual independence certificates for 
its division directors as well as senior executives, while the Office 
of Emergency Management Oversight only maintained them for its senior 
executives (the AIG and Deputy AIG). The Office of Information 
Technology Audits said that instead of signing annual certifications, 
its senior executives sign independence certifications for every audit 
they work on, consistent with procedures for its audit staff. While 
the audit offices told us they maintained independence certificates 
centrally within each office, the OIG executive office, which 
consisted of four senior executives at the time of our audit, 
indicated that it did not do so. In response to our February 2014 
request for copies of certificates for the senior executives in the 
front office, an OIG official gathered certificates from the 
individuals. Two of the certificates were signed after we requested 
them, and according to the official, a certificate could not be found 
for the Acting IG who had recently left the OIG. Similarly, both the 
internal quality reviews and peer reviews conducted from 2009 through 
2012 identified instances in which employees, including some senior 
executives, had not documented their independence in accordance with 
the OIG Audit Manual, although these instances were not deemed 
significant enough to prevent the audit offices from passing these 
reviews. 

If senior officials do not comply with the OIG Audit Manual 
requirement to sign annual certificates of independence or maintain 
them centrally in order to monitor compliance, they might not be aware 
of potential threats to independence or be as familiar with GAGAS or 
CIGIE independence requirements as they should be. For example, as a 
result of an impairment to the former Acting IG's independence that 
was not identified in a timely manner, several audits and inspections 
were affected in fiscal year 2012. Specifically, a total of six 
reports from the Offices of Audits, Information Technology Audits, and 
Inspections were reissued to include a statement about an impairment 
of independence in appearance resulting from a family member of the 
former Acting IG being employed by an entity within DHS associated 
with these audits and inspections. In addition, because of the same 
impairment, one other audit was terminated without a report being 
issued. According to audit staff, they inadvertently became aware of 
the former Acting IG's impairment in July 2012 as a result of an audit 
official hearing about the employment of the family member from a 
source outside of the OIG. 

In addition, a number of other allegations of abuse of power and 
misconduct were made against the former Acting IG, including failure 
to uphold the independence and integrity of the DHS OIG office. These 
issues, among others, were to be the subject of a Subcommittee on 
Financial and Contracting Oversight, Senate Committee on Homeland 
Security and Governmental Affairs, hearing scheduled for December 2013 
that was canceled after the former Acting IG resigned on December 16, 
2013, and transferred to another office within DHS. In April 2014, the 
subcommittee issued a report on its investigation into the allegations 
of misconduct by the former Acting IG.[Footnote 35] This investigative 
report detailed the subcommittee's findings of its investigation into 
the allegations, including some actions that it said jeopardized OIG 
independence. For example, the subcommittee found that the former 
Acting IG had directed the alteration or delay of some reports at the 
request of senior DHS officials and that he did not obtain independent 
legal advice. Subsequent to the issuance of the subcommittee report, 
the new DHS Secretary put the former Acting IG on administrative leave 
pending other investigations. 

While signing a certificate of independence might not have prevented 
these independence issues, it could nevertheless serve as a reminder 
of individual responsibilities and potential threats to independence. 
Further, because certificates of independence are not maintained 
centrally, management's ability to monitor compliance with 
independence requirements and obtain reasonable assurance that 
controls are in place and operating as intended is hindered. However, 
as stated in Standards for Internal Control in the Federal Government, 
no matter how well designed and operated, internal control cannot 
provide absolute assurance that all agency objectives will be 
met.[Footnote 36] Factors outside the control or influence of 
management, such as human error or acts of collusion to circumvent 
controls, can render policies and procedures ineffective. 

Inspection Policies and Procedures Were Consistent with Independence 
Standards: 

According to OIG officials, the DHS OIG's Office of Inspections 
follows guidance in CIGIE's Quality Standards for Inspection and 
Evaluation. In addition, DHS's OIG Inspections Manual states that 
inspectors are expected to be knowledgeable of, and to abide by, the 
performance standards, including independence, described in CIGIE's 
quality standards. The OIG Inspections Manual includes guidance on 
independence that is consistent with CIGIE standards although not as 
detailed. For example, the manual states that while conducting an 
inspection, all team members have a responsibility to maintain 
independence so that opinions, conclusions, judgments, and 
recommendations will be impartial and viewed as such by knowledgeable 
third parties. 

Neither CIGIE's quality standards nor the OIG Inspections Manual 
requires external peer reviews of OIG inspection activities. However, 
CIGIE's quality standards states that an OIG should have quality 
control mechanisms that provide an independent assessment of 
inspection processes and work. To help assess the inspection processes 
and work, in 2006, the AIG for Inspections requested an independent 
external review of three inspections. Each inspection was reviewed by 
a different OIG, and the reviews focused on the quality of work 
performed for each inspection. None of the reports from these external 
reviews identified any independence concerns. More recently, in 
February 2014, the OIG completed its first internal quality review of 
the Office of Inspections. The resulting report indicated that the 
Office of Inspections materially complied with CIGIE's quality 
standards, and the report did not identify any issues with respect to 
independence. 

Investigation Policies and Procedures Were Consistent with 
Independence Standards: 

According to DHS OIG officials, OIG investigations are conducted in 
accordance with CIGIE's Quality Standards for Investigations. In 
addition, the Office of Investigations has its own manual--the Special 
Agent Handbook--which states that investigations will be conducted in 
accordance with CIGIE's standards as well as Attorney General 
Guidelines for OIGs. CIGIE standards for investigations include 
requirements on independence that are similar to those for audits. The 
Special Agent Handbook includes guidance on ethical conduct and 
conflicts of interest, specifically stating that if a special agent 
suspects that a conflict of interest exists or that there might be an 
appearance of a conflict of interest, the agent should notify the 
Special Agent in Charge as soon as possible. 

The DHS OIG Office of Investigations passed peer reviews by the Social 
Security Administration OIG and the Department of Defense OIG in 2009 
and 2013, respectively. Neither of these peer reviews included any 
issues regarding independence or conflicts of interest. In addition, 
the Office of Investigations conducted its own internal inspections in 
the past. None of the internal inspection reports from fiscal years 
2011 and 2012 identified any issues with respect to independence. 
However, because of serious concerns about the independence of the 
internal inspection function carried out by the Office of 
Investigations as previously discussed, the OIG decided to create IQO 
in 2013 and move this function to that office. OIG officials told us 
that the Special Agent Handbook is being updated, in part, as a result 
of the transfer of some functions, such as complaint intake, to IQO. 

Conclusions: 

The DHS OIG's organizational structure has the positions required by 
the IG Act to carry out its various responsibilities. However, the 
lack of an appointed IG for 3 years may have contributed to a number 
of other senior positions being filled with "acting" individuals for 
extended periods of time. The OIG has made some meaningful changes to 
its structure to try to address concerns about the integrity and 
independence of the OIG. The establishment of IQO is intended to 
enhance the OIG's ability to carry out functions such as complaint 
intake and whistleblower protection, including helping to ensure that 
these functions maintain their independence. However, the DHS OIG 
process for recording and referring complaints received directly from 
DHS employees does not provide reasonable assurance that employees' 
identities are protected, as required by the IG Act. In addition, the 
important role that the OIG plays in receiving and investigating 
allegations of criminal activity within the department can be enhanced 
through better coordination and information sharing with the FBI. OIG 
officials intend to continue working toward improved coordination with 
the FBI and provided input to a DHS report with their plans, as 
directed by the Senate. In light of the congressional direction to 
DHS, we are not making a recommendation on this matter at this time. 
Furthermore, although the IG has its own counsel as required by the IG 
Act, the OIG did not have a policy to address the legal requirements 
related to obtaining advice from legal counsel. While the DHS OIG has 
appropriate policies and procedures in place to comply with 
independence standards, even the best control procedures cannot always 
guarantee that standards are being met. Although the former Acting IG 
was required to sign an annual certificate of independence reminding 
him of independence requirements, the OIG did not have a policy that 
these certificates be collected and maintained centrally, which would 
improve management's ability to monitor compliance with independence 
requirements. 

Recommendations for Executive Action: 

We recommend that the OIG take the following three actions: 

* To improve its intake and complaint processing function, we 
recommend that the OIG design and implement additional controls, which 
may include additional automated controls and supervisory review, to 
provide reasonable assurance that employees' identities are not 
disclosed without their consent when forwarding complaints to DHS 
components. 

* To help avoid any impairment to independence when seeking legal 
advice, we recommend that the OIG develop a policy for obtaining legal 
advice from counsel reporting either directly to the IG or another IG 
and work with the IG's counsel to establish guidelines for when it 
would be appropriate for the OIG to consult with the department's 
counsel. 

* To help ensure that senior executives are aware of independence 
requirements so that they are able to identify and mitigate any 
threats to their independence, we recommend that the OIG revise its 
guidance in the OIG Audit Manual to require signed annual certificates 
of independence to be collected and maintained centrally in order to 
monitor compliance. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the DHS Inspector General for 
review and comment. In written comments, which are reprinted in 
appendix IV, the OIG generally agreed with our conclusions and 
concurred with all of our recommendations. In addition, the OIG 
provided technical comments that we incorporated into the report as 
appropriate. We also provided the FBI with an excerpt of the draft 
report related to its coordination with the OIG on border corruption 
investigations. The FBI did not have any comments. 

The OIG described actions planned and under way to address each of our 
recommendations. Specifically, the OIG stated that it is revising its 
online allegation form to (1) ensure complainants do not inadvertently 
provide personal data when their intent was to remain anonymous and 
(2) simplify and clarify to complainants the distinctions between 
filing an anonymous complaint versus filing a confidential complaint. 
The OIG anticipates completing the changes to the online allegation 
form within 90 days of its letter. According to the OIG, it has also 
implemented supervisory controls to provide oversight and quality 
control of intake analysts' work, including the movement or referral 
of complaints to DHS components. The OIG also stated that it plans to 
develop policy and guidelines within 90 days of its letter to describe 
the circumstances under which the IG can obtain legal advice from 
DHS's Office of Legal Counsel. In addition, the OIG plans to revise 
its audit manual by October 31, 2014, to require the Office of 
Integrity and Quality Oversight to collect and maintain senior 
executives' signed annual independence statements. If implemented 
effectively, the OIG's planned actions should address the intent of 
our recommendations. 

We are sending copies of this report to appropriate congressional 
committees, the Secretary of Homeland Security, and the DHS Inspector 
General. In addition, the report is available at no charge on the GAO 
website at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-9869 or khana@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff members who made key 
contributions to this report are listed in appendix V. 

Signed by: 

Asif A. Khan: 
Director Financial Management and Assurance: 

List of Committees: 

The Honorable Mary L. Landrieu: 
Chairwoman: 
The Honorable Dan Coats: 
Ranking Member: 
Subcommittee on Homeland Security: 
Committee on Appropriations: 
United States Senate: 

The Honorable John R. Carter: 
Chairman: 
The Honorable David E. Price: 
Ranking Member: 
Subcommittee on Homeland Security: 
Committee on Appropriations: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The joint explanatory statement accompanying the Department of 
Homeland Security (DHS) Appropriations Act, 2013, directed GAO to 
review the Office of Inspector General's (OIG) organizational 
structure and whether its audit, investigation, and inspection 
functions are organizationally structured to ensure that independence 
standards are met.[Footnote 37] To meet the committee's time frames 
established in the explanatory statement, we briefed committee staffs 
on our preliminary observations in November 2013. This report provides 
the results of our review to determine (1) the coverage that the OIG's 
audits and inspections provided of DHS's key component agencies, 
management challenges, and high-risk areas; (2) the extent to which 
the OIG's organizational structure and roles and responsibilities were 
consistent with the Inspector General Act of 1978, as amended (IG 
Act); and (3) the extent to which the design of OIG's policies and 
procedures for planning, reviewing, and reporting on audit, 
inspection, and investigation results was consistent with applicable 
independence standards. 

To determine the coverage that DHS OIG's audits and inspections 
provided of DHS's key component agencies, management challenges, and 
high-risk areas, we reviewed the DHS agency financial reports for 
fiscal years 2012 and 2013 to identify DHS's key operational 
components. To identify the department's management challenges, we 
reviewed the OIG's annual performance plans for fiscal years 2012 and 
2013. To identify the high-risk areas for DHS, we reviewed GAO's High-
Risk Series for 2013. To identify DHS OIG reports issued during fiscal 
years 2012 and 2013 and the subjects covered in those reports, we 
reviewed DHS OIG's semiannual reports. In conducting our analysis, we 
did not review the coverage provided by investigations because they 
are generally conducted based on specific allegations of misconduct 
received and are not planned in advance as audits and inspections are. 
We compared the agencies and subjects covered in these audit and 
inspection reports with DHS's key component agencies, management 
challenges, and high-risk areas to determine DHS OIG's oversight 
coverage of DHS. We also interviewed knowledgeable DHS OIG officials 
to obtain their comments about the results of our analysis. 

To determine the extent to which the organizational structure, roles, 
and responsibilities of the DHS OIG were consistent with the IG Act, 
we reviewed DHS OIG's organization chart, office descriptions, 
policies related to its roles and responsibilities, memorandums of 
understanding, and other relevant documents. We also interviewed 
former and current DHS OIG officials, as well as officials from DHS 
components, including officials from U.S. Customs and Border 
Protection, U.S. Immigration and Customs Enforcement, and the Federal 
Emergency Management Agency, and officials from the Federal Bureau of 
Investigation (FBI). We analyzed the information from interviews and 
documentation to determine whether there were any inconsistencies 
between the information and the applicable IG Act requirements and the 
reasons for any such inconsistencies. Our review focused primarily on 
OIG documentation and discussions with OIG officials to assess the 
design of the OIG's stated roles and responsibilities. For the most 
part, we did not review the implementation of these roles and 
responsibilities except for certain issues that came to our attention-
-specifically, the lack of a memorandum of understanding with the FBI, 
the procedures for protecting employee confidentiality, and the nature 
of OIG consultations with the department's legal counsel. 

To determine the extent to which the design of DHS OIG's policies and 
procedures for planning, reviewing, and reporting on audit, 
inspection, and investigation results was consistent with applicable 
independence standards, we interviewed DHS OIG officials and reviewed 
applicable policy, procedure, and planning documents, such as the OIG 
Audit Manual, OIG Inspections Manual, and Special Agent Handbook. We 
also reviewed peer review reports of audit and investigative 
operations as well as reports of internal inspections of investigative 
activities. We assessed the design of the DHS OIG's policies and 
procedures for planning, reviewing, and reporting on audit, 
investigation, and inspection results and determined whether the 
design was consistent with applicable independence standards found in 
Government Auditing Standards and the standards published by the 
Council of the Inspectors General on Integrity and Efficiency that 
include Quality Standards for Federal Offices of Inspector General, 
Quality Standards for Inspection and Evaluation, and Quality Standards 
for Investigations. We also requested information about which 
employees signed annual certifications of independence and requested 
copies of these certifications for selected staff. 

We conducted this performance audit from June 2013 to September 2014 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Inspector General Quality and Independence Standards: 

Quality Standards: 

Federal inspectors general (IG) have various quality standards to 
which their offices must adhere in performing their work. The Quality 
Standards for Federal Offices of Inspector General (referred to as the 
Silver Book), adopted by Council of the Inspectors General on 
Integrity and Efficiency (CIGIE), provides the overall quality 
framework for managing, operating, and conducting the work of offices 
of inspector general (OIG) and covers critical topics such as 
independence, ethics, and confidentiality.[Footnote 38] These quality 
standards also address planning and coordinating work, maintaining 
quality assurance, and ensuring internal control.[Footnote 39] In 
addition to the Silver Book, federal OIGs have standards for specific 
types of work. For audits, the Inspector General Act of 1978, as 
amended requires IGs to carry out work in accordance with generally 
accepted government auditing standards published in Government 
Auditing Standards.[Footnote 40] For investigations and inspections, 
CIGIE has developed additional standards: Quality Standards for 
Investigations[Footnote 41] and Quality Standards for Inspection and 
Evaluation.[Footnote 42] 

Independence Standards: 

Government Auditing Standards and CIGIE standards contain provisions 
covering independence. Government Auditing Standards establishes a 
conceptual framework that can be used to identify, evaluate, and apply 
safeguards (such as removing an individual from an audit team or 
consulting an independent third party) to eliminate the threats to 
independence or reduce them to an acceptable level. Under Government 
Auditing Standards, IGs should evaluate the following broad categories 
of threats to independence: 

1. Self-interest: The threat that a financial or other interest will 
inappropriately influence an auditor's judgment or behavior. 

2. Self-review: The threat that an OIG employee or OIG that has 
provided nonaudit services will not appropriately evaluate the results 
of previous judgments made or services performed as part of the 
nonaudit services when forming a judgment significant to an audit. 

3. Bias: The threat that an OIG employee will, as a result of 
political, ideological, social, or other convictions, take a position 
that is not objective. 

4. Familiarity: The threat that aspects of a relationship with 
management or personnel of an audited entity, such as a close or long 
relationship or that of an immediate or close family member, will lead 
an OIG employee to take a position that is not objective. 

5. Undue influence: The threat that external influences or pressures 
will affect an OIG employee's ability to make independent and 
objective judgments. 

6. Management participation: The threat that results from an auditor's 
taking on the role of management or otherwise performing management 
functions on behalf of the entity undergoing an audit. 

7. Structural: The threat that an OIG's placement within a government 
entity, in combination with the structure of the government entity 
being audited, will affect the OIG's ability to perform work and 
report results objectively. 

CIGIE's Quality Standards for Federal Offices of Inspector General 
closely mirrors the independence language in Government Auditing 
Standards. For example, it states that IGs and their staffs must be 
free both in fact and in appearance from personal, external, and 
organizational impairments to their independence. Further, the IGs and 
their staffs have a responsibility to maintain independence so that 
opinions, conclusions, judgments, and recommendations will be 
impartial and viewed as impartial by knowledgeable third parties. 
CIGIE also addresses the same seven categories of threats to 
independence as Government Auditing Standards. CIGIE's standards 
specifically for investigations and inspections also include language 
about the importance of independence; however, they contain far less 
detail about independence than the overall standards. 

[End of section] 

Appendix III: DHS OIG's Policies and Procedures to Address Selected IG 
Act Requirements: 

The Inspector General (IG) Act of 1978, as amended requires the 
independent IGs at major departments and agencies, including 
Department of Homeland Security (DHS), to carry out specific roles and 
responsibilities.[Footnote 43] Table 6 summarizes selected 
requirements and the DHS Office of Inspector General's (OIG) 
procedures for carrying out these requirements. 

Table 6: Department of Homeland Security (DHS) Office of Inspector 
General (OIG) Procedures to Address Selected Inspector General (IG) 
Act of 1978, as Amended (IG Act) Requirements: 

IG Act requirement: IG must report to head of establishment (i.e., 
DHS). [Section 3(a)]; 
DHS OIG policies or procedures: The DHS OIG has an IG position that 
reports to the Secretary of DHS[A]. 

IG Act requirement: Appointment of Assistant IG for Auditing. [Section 
3(d)(1)(A)]; 
DHS OIG policies or procedures: The DHS OIG has an Assistant IG for 
Audits[A]. 

IG Act requirement: Appointment of Assistant IG for Investigations. 
[Section 3(d)(1)(B)]; 
DHS OIG policies or procedures: The DHS OIG has an Assistant IG for 
Investigations[A]. 

IG Act requirement: Appointment of Whistleblower Protection Ombudsman. 
[Section 3(d)(1)(C)]; 
DHS OIG policies or procedures: The DHS OIG has a Whistleblower 
Protection Ombudsman[A]. 

IG Act requirement: Obtain legal advice from counsel reporting to an 
IG. [Section 3(g)]; 
DHS OIG policies or procedures: The DHS OIG obtains legal advice from 
its Office of Counsel[A]. 

IG Act requirement: Provide policy direction for, and conduct, 
supervise, and coordinate audits and investigations relating to, the 
programs and operations of such establishment. [Section 4(a)(1)]; 
DHS 
OIG policies or procedures: The DHS OIG's Office of Management is 
responsible for developing audit policy and directives. The DHS OIG's 
Offices of Audits and Investigations are responsible for conducting, 
supervising, and coordinating audits and investigations.[A] The DHS OIG 
Audit Manual and Special Agent Handbook assist these offices with their 
responsibilities. 

IG Act requirement: Make recommendations in semiannual reports 
regarding the impact of existing and proposed legislation and 
regulations on programs and operations of such establishment. [Section 
4(a)(2)]; 
DHS OIG policies or procedures: The DHS OIG has a Planning and 
Compliance Division responsible for reviewing legislation and 
regulations as well as managing the semiannual report process. See the 
DHS OIG's website for its semiannual reports. 

IG Act requirement: Promote economy, efficiency, and effectiveness in 
preventing and detecting fraud and abuse in its programs and 
operations. [Section 4(a)(3)]; 
DHS OIG policies or procedures: Six of the DHS OIG's offices--the 
Offices of Audits, Emergency Management Oversight, Information 
Technology Audits, Inspections, Integrity and Quality Oversight, and 
Investigations--support its mission to improve, or prevent and detect 
fraud and abuse in, DHS programs and operations[A]. 

IG Act requirement: Coordinate relationships between the establishment 
and other federal agencies, state and local governmental agencies, and 
nongovernmental entities with respect to (A) all matters relating to 
the promotion of economy and efficiency in the prevention and detection 
of fraud and abuse in, programs and operations administered or financed 
by such establishment, or (B) the identification and prosecution of 
participants in such fraud or abuse. [Section 4(a)(4)]; 
DHS OIG policies or procedures: The DHS OIG has memorandums of 
understanding with other DHS investigative components in order to 
coordinate responsibilities and relationships regarding the matters 
discussed in section 4(a)(4) of the IG Act. 

IG Act requirement: Report to the head of the establishment and 
Congress on fraud and other serious issues relating to the 
establishment's administration of programs and operations, recommended 
corrective actions, and progress made in implementing corrective 
actions. [Section 4(a)(5)]; 
DHS OIG policies or procedures: DHS Management Directive 0810.1 states 
that the OIG is authorized to inform the Secretary, Deputy Secretary, 
and Congress about any problems and deficiencies relating to the 
administration of any DHS program or operation and the need for, and 
progress of, corrective action. It also states that the OIG is to 
prepare semiannual reports to the Secretary and Congress in accordance 
with the IG Act. 

IG Act requirement: Comply with standards established by the 
Comptroller General of the United States for audits of federal 
establishments, organizations, programs, activities, and functions. 
[Section 4(b)(1)(A)]; 
DHS OIG policies or procedures: According to OIG officials, the 
Offices of Audits, Information Technology Audits, and Emergency 
Management Oversight all follow the DHS OIG Audit Manual. The manual 
refers to and builds upon government auditing standards. 

IG Act requirement: Establish guidelines for determining when to use 
non-federal auditors and assure that any work performed by non-federal 
auditors complies with government auditing standards. [Section 
4(b)(1)(B-C)]; 
DHS OIG policies or procedures: The DHS OIG Audit Manual provides 
policy and guidance and delineates responsibilities for the engagement 
and oversight of federal and nonfederal contract auditors (i.e., 
outside auditors) performing audits of DHS on the DHS OIG's behalf. 

IG Act requirement: Quality control and peer reviews of the OIG shall 
be performed exclusively by an IG appointed pursuant to the IG Act, the 
Government Accountability Office (GAO) or certain limited federal audit 
entities. [Section 4(b)(2)]; 
DHS OIG policies or procedures: The organization chart and mission 
statement for the DHS OIG's Office of Integrity and Quality Oversight 
state that it is responsible for quality control compliance and will 
facilitate the peer review process going forward. This office will 
also ensure that quality requirements for investigative, audit, and 
inspection reports are fulfilled. 

IG Act requirement: Effectively coordinate with GAO to avoid 
duplication and ensure effective coordination and cooperation. [Section 
4(c)]; 
DHS OIG policies or procedures: According to the DHS OIG's Audit 
Process Handbook, audit teams will coordinate with GAO and other OIG 
offices to identify any prior or ongoing work in the area to be 
audited. 

IG Act requirement: Report to the Attorney General whenever the IG has 
reasonable grounds to believe there has been a violation of federal 
criminal law. [Section 4(d)]; 
DHS OIG policies or procedures: The Special Agent Handbook requires 
the DHS OIG to report violations of federal criminal law to the 
Attorney General through the Federal Bureau of Investigation (FBI). In 
cases of concurrent jurisdiction, the OIG must promptly notify the FBI 
in writing upon the initiation of any criminal investigation. 

IG Act requirement: Prepare semiannual reports summarizing the 
activities of the office during the immediately preceding six-month 
periods ending March 31 and September 30. [Section 5]; 
DHS OIG policies or procedures: The DHS OIG publishes semiannual 
reports as described in section 5. See the DHS OIG's website for 
copies of these reports. 

IG Act requirement: Require by subpoena the production of all 
documentary evidence and other data in any medium necessary in the 
performance of the functions assigned by this act. [Section 6(a)(4)]; 
DHS OIG policies or procedures: The DHS OIG's Strategic Plan states 
that the OIG's Office of Counsel furnishes attorney services for the 
issuance and enforcement of OIG subpoenas. 

IG Act requirement: Take from any person an oath, affirmation, or 
affidavit, whenever necessary in the performance of the functions 
assigned by this act, which will have the same effect as if taken by a 
sealed officer. [Section 6(a)(5)]; 
DHS OIG policies or procedures: The Special Agent Handbook states that 
the DHS OIG's Office of Investigations is tasked with taking oaths, 
affirmations, and affidavits. 

IG Act requirement: Employ officers and employees as necessary for 
carrying out the functions, powers, and duties of the office. [Section 
6(a)(7)]; 
DHS OIG policies or procedures: The DHS OIG's Strategic Plan states 
that the OIG's Office of Management provides critical administrative 
support functions, including personnel services. 

IG Act requirement: Whenever information or assistance requested is 
unreasonably refused or not provided, the IG shall report the 
circumstances to the head of the establishment involved. [Section 
6(b)(2)]; 
DHS OIG policies or procedures: The DHS OIG's Strategic Plan states 
that the OIG is required to inform the Secretary of serious problems, 
including when a request for information is unreasonably refused or 
information is not provided. 

IG Act requirement: For each fiscal year, an IG shall transmit a budget 
estimate and request to the head of the establishment to which the IG 
reports. [Section 6(f)(1)]; 
DHS OIG policies or procedures: The DHS OIG's Strategic Plan states 
that the OIG's Office of Management is responsible for budget 
formulation and execution. 

IG Act requirement: The IG may receive and investigate complaints or 
information from an employee concerning possible violations of law, 
rules, or regulations, or mismanagement, gross waste of funds, abuse of 
authority or a substantial and specific danger to the public health and 
safety. [Section 7(a)]; 
DHS OIG policies or procedures: The DHS OIG administers a complaint 
hotline and also receives complaints from other DHS components. The 
OIG reviews each complaint and decides whether to open an 
investigation. The Special Agent Handbook describes this process. 

IG Act requirement: The IG shall not disclose the identity of an 
employee who submitted a complaint or other information without the 
consent of the employee, unless the IG determines such disclosure is 
unavoidable during the course of the investigation. [Section 7(b)]; 
DHS OIG policies or procedures: The Special Agent Handbook cites the 
IG Act and requires that the OIG not disclose a complainant's name 
without his/her permission unless the IG determines such disclosure is 
unavoidable. 

IG Act requirement: Any employee who has authority to take, direct 
others to take, recommend, or approve any personnel action, shall not, 
with respect to such authority, take or threaten to take any action 
against any employee as a reprisal for making a complaint or disclosing 
information to an IG, unless the complaint was made or the information 
disclosed with the knowledge that it was false or with willful 
disregard for its truth or falsity. [Section 7(c)]; 
DHS OIG policies or procedures: The Special Agent Handbook includes 
excerpts from both the IG Act and Whistleblower Protection Act 
regarding this issue. 

IG Act requirement: Within 30 days of notice from the Secretary 
exercising the right to prohibit the IG from completing any audit or 
investigation, the IG shall transmit to the President of the Senate, 
the Speaker of the House of Representatives, and appropriate committees 
and subcommittees of Congress (A) a copy of such notice and (B) a 
written response agreeing or disagreeing with such exercise and the 
reasons for any disagreement. [Section 8I(a)(3)(A-B)]; 
DHS OIG policies or procedures: The DHS OIG's Strategic Plan states 
that the OIG is required to inform Congress of serious problems. While 
the OIG does not have a specific written policy regarding this 
requirement, an OIG official stated that the IG Act serves as the 
OIG's policy for this type of situation. Further, the official said 
that this type of situation has not occurred in at least the past 7 
years. 

IG Act requirement: Subject to special provisions concerning DHS, the 
DHS OIG may initiate, conduct, and supervise such audits and 
investigations in DHS as the IG considers appropriate. [Section 8I(c)]; 
DHS OIG policies or procedures: The DHS OIG has three offices 
responsible for conducting audits and one office responsible for 
investigations. The OIG Audit Manual and Special Agent Handbook provide 
guidance on these responsibilities. 

IG Act requirement: DHS OIG has oversight responsibility for internal 
investigations performed by the Office of Internal Affairs of the 
United States Customs Service, the Office of Inspections of the United 
States Secret Service, the Bureau of Border Security, and the Bureau of 
Citizenship and Immigration Services. The head of each office or bureau 
shall promptly report to the IG the significant activities being 
carried out. [Section 8I(e)]; 
DHS OIG policies or procedures: The DHS OIG's Strategic Plan and a 
management directive state that the Office of Investigations provides 
oversight and monitors the investigations of DHS's various internal 
affairs offices. 

IG Act requirement: The DHS IG shall designate a senior official within 
the OIG to coordinate OIG activities regarding the OIG's investigations 
of abuses of civil rights or civil liberties. [Section 8I(f)(1-2)]; 
DHS OIG policies or procedures: A management directive designates the 
Assistant IG for Investigations as having responsibilities related to 
allegations of civil rights and civil liberties abuses. Also, the DHS 
OIG Strategic Plan states that the Office of Investigations has 
responsibilities for investigating and reporting civil rights and civil 
liberties abuses. 

IG Act requirement: No later than 3 days after any report or audit (or 
portion of any report or audit) is made publicly available, the IG of 
each agency shall (A) post that report or audit (or portion thereof) on 
the OIG's website; and (B) ensure that any posted report (i) is easily 
accessible from a direct link on the OIG's website homepage; (ii) 
includes a summary of the IG's findings; and (iii) is in a format that 
(I) is searchable and downloadable; and (II) facilitates printing by 
those accessing the website. [Section 8M(b)(1)(A-B)]; 
DHS OIG policies or procedures: The DHS OIG's Strategic Plan states 
that the Office of Management is responsible for posting reports to 
the DHS OIG's public website. Per DHS OIG guidance, reports are posted 
to the website within 3 days of being made publicly available. 

IG Act requirement: Maintain a direct link on the homepage of the 
website of the OIG for individuals to report fraud, waste, and abuse 
without being required to provide personally identifying information. 
[Section 8M(b)(2)(A)]; 
DHS OIG policies or procedures: The DHS OIG has a link on its website 
for reporting fraud, waste, and abuse, which is managed by its Office 
of Integrity and Quality Oversight. 

Source: GAO analysis of DHS policies and procedures compared to 
selected IG Act requirements. GAO-14-726. 

[A] See organization chart in figure 1 of this report. 

[End of table] 

[End of section] 

Appendix IV: Comments from the Department of Homeland Security Office 
of Inspector General: 

Office of Inspector General: 
Department of Homeland Security: 
Washington, DC 20528: 
[hyperlink, http://www.oig.dhs.gov] 

September 8, 2014: 

Mr. Asif A. Khan: 
Director, Financial Management and Assurance: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Khan: 

We have reviewed your draft report Inspectors General: DHS OIG's 
Structure, Policies and Procedures Are Consistent with Standards, but 
Areas for Improvement Exist (GAO-14-726). 

We are pleased that you have found that our office's policies and 
procedures are consistent with established quality and independence 
standards, and that we have made recent changes to even further 
enhance independence and oversight, such as establishing an Office of 
Integrity and Quality Oversight. We also note that you have correctly 
concluded that our reports cover all of the DHS management challenges 
and high risk areas. 

We have provided technical comments separately. We appreciate your 
consideration to these matters. 

In addition, before responding to your recommendations, I have a few 
overarching comments that would be important for you to consider 
before completing your report. 

* Few organizations are static, and that is especially true of DHS OIG 
in the last six months. Many of your observations involve the former 
Acting IG/Deputy IG (an individual who is no longer a DHS OIG 
employee), and the criminal conduct committed by former employees in 
our McAllen, Texas field office (who have been criminally prosecuted 
and likewise no longer employed by DHS OIG). The threats to our 
independence, as reflected in those episodes, were not a result of
a structural deficiency, but a failure of leadership at the highest 
level. The significant vacancies you noted, present at my arrival, are 
either filled or in the process of being filled. We are a far 
different organization than we were last year. 

* Independence and integrity are the sine qua non of the Inspector 
General; without independence in fact and appearance, every audit, 
every inspection and every investigation will be suspect. Our conduct 
must be beyond reproach. Since my nomination and confirmation in March 
of this year, I have stressed to my employees — in office visits, in 
town hall meetings, in my internal written communication, and in my 
public statements and testimony — the necessity to relentlessly 
scrutinize and jealously guard against threats to our independence.
The events of the last several years have seared into our 
organizational culture the perils of losing the perception of 
independence. I have spoken with hundreds of OIG employees since my 
arrival, and I am confident that my leadership on the issue in the 
last six months has driven the point home. 

* While not related to the issue of organizational independence, and not
incorporated into a recommendation, the report notes we lack a 
national-level agreement with the FBI to coordinate investigations of 
border corruption. I was disappointed that your report fails to note 
the joint cases DHS OIG currently conducts in partnership with the FBI 
along the Southwest border, and OIG's participation in the Border 
Corruption Task Forces in Buffalo, Detroit, Houston, Newark, the Rio 
Grande Valley, Laredo, Tucson, Yuma, Sierra Vista, and San Diego. 
Clearly, the lack of a national-level agreement is not preventing us 
from working cases together. 

Nevertheless, we will continue to work with the FBI towards a written 
national-level agreement. We will also continue to notify the FBI of 
every investigation we open, as the Inspector General Act requires. 
Our independent Office of Integrity and Quality Oversight assures 
field office compliance with this requirement. Unfortunately, the FBI 
currently does not notify us of investigations of DHS employees 
suspected of corruption, and has resisted our suggestion that it do 
so. This lack of reciprocity makes negotiating a coordination 
agreement challenging, and could ultimately place agents from both 
Departments at physical risk. 

Lastly, here is our formal response to your recommendations: 

Recommendation 1: To improve its intake and complaint processing 
function, GAO recommends that the IG design and implement additional 
controls, which may include additional automated controls and 
supervisory review, to provide reasonable assurance that employee's 
identities are not disclosed without their consent when forwarding 
complaints back to DHS components. 

Concur. We are currently improving our online allegation form to ensure
complainants do not inadvertently provide personal data when their 
intent was to remain anonymous. Likewise, we are currently improving 
the online allegation form to simplify and clarify to complainants the 
distinctions between filing an anonymous complaint versus filing a 
confidential complaint. We have implemented supervisory controls to 
provide oversight and quality control of intake analysts' work 
product, including the movement or referral of complaints. We will 
complete the changes to our online allegation form within 90 days. 

Recommendation 2: To help avoid any impairment to independence when
seeking legal advice, we recommend that the OIG develop a policy for 
obtaining legal advice from counsel reporting either directly to the 
IG or another IG and work with the IG's counsel to establish 
guidelines for when it would be appropriate for the OIG to consult 
with the department's counsel. 

Concur. Within 90 days, we will develop policy and guidelines in which 
we describe the circumstances under which the Inspector General can 
obtain legal advice from the Department's Office of Legal Counsel 
rather than the Counsel to the DHS Inspector General, or another 
Inspector General's office. 

Recommendation 3: To help ensure that senior executives are aware of
independence requirements so that they are able to identify and 
mitigate any threats to their independence, we recommend that the OIG 
revise its guidance in the Audit Manual to require signed annual 
certificates of independence to be collected and maintained centrally 
in order to monitor compliance. 

Concur. We will revise the audit manual to require senior executives 
signed annual independence statements will be collected and maintained 
by the Office of Integrity and Quality Oversight. We plan to publish a 
revised audit manual by October 31, 2014. 

Sincerely, 

Signed by: 

John Roth: 
Inspector General: 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Asif A. Khan, (202) 512-9869 or khana@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Michael LaForge (Assistant 
Director), Fred Evans, Latasha Freeman, Maxine Hattery, Colleen 
Heywood, Jackson Hufnagle, Kristi Karls, and Laura Pacheco made 
significant contributions to this work. Kathryn Bernet, Jacquelyn 
Hamilton, and Helina Wong also contributed to this report. 

[End of section] 

Footnotes: 

[1] Audits are independent, objective assessments of the stewardship, 
performance, or cost of an agency's policies, programs, or operations. 
Inspections are evaluations, inquiries, and similar types of reviews 
that do not constitute an audit or an investigation, and provide the 
benefits of a flexible mechanism for optimizing resources, expanding 
agency coverage, and using alternate review methods and techniques. 
Investigations can involve allegations of criminal, civil, or 
administrative misconduct, and can result in criminal prosecutions, 
fines, civil monetary penalties, administrative sanctions, and 
personnel actions. 

[2] Pub. L. No. 113-6, § 2, Div. D, 127 Stat. 342, 344 and 360 (Mar. 
26, 2013). According to OIG officials, this amount was reduced to $141 
million after sequestration. 

[3] Pub. L. No. 95-452, 92 Stat. 1101 (Oct. 12, 1978) codified, as 
amended, at 5 U.S.C. App. 

[4] GAO, Government Auditing Standards: 2011 Revision, [hyperlink, 
http://www.gao.gov/products/GAO-12-331G] (Washington, D.C.: December 
2011). 

[5] Joint Explanatory Statement, 159 Cong. Rec. S1275, 1548 (daily 
ed., Mar. 11, 2013), to the Department of Homeland Security 
Appropriations Act, 2013, contained in Division D of the Consolidated 
and Further Continuing Appropriations Act, 2013, Pub. L. No. 113-6 
(Mar. 26, 2013). 

[6] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-13-283] (Washington, D.C.: February 
2013). 

[7] A peer review, also known as an external quality control review, 
is required by Government Auditing Standards to be performed at least 
once every 3 years by an organization independent of the organization 
being reviewed. The objective is to provide a reasonable basis for 
determining whether, for the period under review, the reviewed audit 
organization's system of quality control was suitably designed and 
whether the audit organization is complying with its quality control 
system in order to provide the audit organization with reasonable 
assurance of conforming with applicable professional standards. 

[8] CIGIE was established by the Inspector General Reform Act of 2008 
(Pub. L. No. 110-409, 122 Stat. 4302 (Oct. 14, 2008)) and consists 
mainly of IGs. 

[9] Pub. L. No. 107-296, 116 Stat. 2135 (Nov. 25, 2002). 

[10] Department of Homeland Security, U.S. Department of Homeland 
Security Agency Financial Report Fiscal Year 2013 (Washington, D.C.: 
Dec. 11, 2013). 

[11] The IG Act Amendments of 1988 established additional IGs who are 
appointed by their respective entity heads in designated federal 
entities--generally smaller agencies and other types of federal 
organizations--identified by the act. 

[12] The IG Act includes a special provision for DHS that allows the 
Secretary of Homeland Security to prohibit the IG from carrying out or 
completing any audit or investigation, or from issuing any subpoena, 
if the Secretary determines that such prohibition is necessary (1) to 
prevent the disclosure of sensitive information, (2) to preserve 
national security, or (3) to prevent a significant impairment to the 
interests of the United States. 

[13] [hyperlink, http://www.gao.gov/products/GAO-12-331G]. 

[14] Council of the Inspectors General on Integrity and Efficiency, 
Quality Standards for Federal Offices of Inspector General 
(Washington, D.C.: August 2012). See also 5 U.S.C. App. § 11(c)(2). 

[15] The 361 reports do not include capping reports and annual reports 
that summarize individual audits and inspections. Further, we did not 
include investigations in our review of the OIG's oversight coverage 
because most investigations are reactive--based on allegations of 
misconduct--rather than planned in advance as audits and inspections 
are. 

[16] 6 U.S.C. § 612(a)(3)(A). Grants audited under this section are 
referred to by the OIG as hazard grants and do not include Disaster 
Assistance Grants provided under section 203, title IV, or title V of 
the Robert T. Stafford Disaster Relief and Emergency Assistance Act. 

[17] The Disaster Relief Fund is an appropriation against which FEMA 
can direct, coordinate, manage, and fund eligible response and 
recovery efforts associated with domestic major disasters and 
emergencies to supplement state resources pursuant to the Robert T. 
Stafford Relief and Emergency Assistance Act. 

[18] Pub. L. No. 106-531, 114 Stat. 2537 (Nov. 22, 2000). 

[19] [hyperlink, http://www.gao.gov/products/GAO-13-283]. 

[20] In 2013, GAO changed the name of this high-risk area from 
"Implementing and Transforming" to "Strengthening DHS Management 
Functions" to recognize DHS's progress in its implementation and 
transformation since its creation, as well as to focus on its 
remaining challenges in strengthening its management functions and 
integrating those functions across the department. 

[21] See list of related GAO reports on the National Flood Insurance 
Program included in GAO, Overview of GAO's Past Work on the National 
Flood Insurance Program, [hyperlink, 
http://www.gao.gov/products/GAO-14-297R] (Washington, D.C.: Apr. 9, 
2014). 

[22] 5 U.S.C. App. § 3. 

[23] The Whistleblower Protection Ombudsman is to educate agency 
employees about their rights if they make a "protected disclosure," 
including protections against retaliation for making such a 
disclosure. The IG Act states that any employee who has authority to 
take, direct others to take, recommend, or approve any personnel 
action shall not, with respect to such authority, take or threaten to 
take any action against any employee as a reprisal for making a 
complaint or disclosing information to an IG unless the complaint was 
made or the information disclosed with the knowledge that it was false 
or with willful disregard for its truth or falsity. 

[24] Strengthening Government Oversight: Examining the Roles and 
Effectiveness of Oversight Positions within the Federal Workforce, 
Before the Senate Homeland Security and Governmental Affairs 
Subcommittee on Efficiency and Effectiveness of Federal Programs and 
the Federal Workforce, 113th Cong. (Nov. 19, 2013). 

[25] The Federal Vacancies Reform Act of 1998 limits the time that a 
person can serve as an acting officer in a position that requires 
presidential appointment and Senate confirmation. This time limit is 
210 days beginning on the date the vacancy occurs, but an acting 
official may continue to serve for 210 days after a first (or second) 
nomination is rejected, withdrawn, or returned. See 5 U.S.C. § 3346. 
The first acting IG term was extended because of a first nomination of 
an IG, resulting in the acting period going from February 27, 2011, 
until January 3, 2013. 

[26] Although a new AIG was assigned to the Office of Inspections in 
June 2013, that individual was detailed to another agency and 
continued to be as of September 2014. As a result, the office has 
continued to be led by an Acting AIG. 

[27] See app. III for a description of other selected IG Act 
provisions applicable to the DHS OIG and how they are being met. 

[28] The Special Agent Handbook requires that criminal investigations 
be reported expeditiously in accordance with Attorney General 
Guidelines. These guidelines require that when a case involves 
concurrent jurisdiction between the FBI and an OIG, each agency must 
notify the other in writing promptly--generally defined as within 30 
days--of initiating a criminal investigation. See also Pub. L. No. 95-
452, §4(a)(4), 92 Stat. 1101 (Oct. 12, 1978) (codified, as amended, at 
5 U.S.C. App.). 

[29] Attorney General Guidelines for Offices of Inspector General with 
Statutory Law Enforcement Authority (Dec. 8, 2003) (implementing 5 
U.S.C. App. § 4(d)). 

[30] Border Corruption: Assessing Customs and Border Protection and 
the Department of Homeland Security Inspector General's Office 
Collaboration in the Fight to Prevent Corruption, Before the Senate Ad 
Hoc Subcommittee on Disaster Recovery and Intergovernmental Affairs of 
the Committee on Homeland Security and Governmental Affairs, 112th 
Cong. (June 9, 2011). 

[31] S. Rep. No. 113-77, at 13 (July 18, 2013). Subsequent to our 
review, DHS issued its report on September 10, 2014. 

[32] S. Rep. No. 113-198, at 17 (June 26, 2014). 

[33] U.S. Senate Committee on Homeland Security and Governmental 
Affairs, Subcommittee on Financial and Contracting Oversight, 
Investigation into Allegations of Misconduct by the Former Acting and 
Deputy Inspector General of the Department of Homeland Security, Staff 
Report (Washington, D.C.: Apr. 24, 2014). 

[34] OIG officials said that the OIG Office of Counsel coordinates and 
conducts annual ethics training for all OIG filers of confidential and 
public financial disclosure reports. 

[35] U.S. Senate Committee on Homeland Security and Governmental 
Affairs, Subcommittee on Financial and Contracting Oversight, 
Investigation into Allegations of Misconduct by the Former Acting and 
Deputy Inspector General of the Department of Homeland Security. 

[36] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[37] Joint Explanatory Statement, 159 Cong. Rec. S1275, 1548 (daily 
ed., Mar. 11, 2013), to the Department of Homeland Security 
Appropriations Act, 2013, contained in Division D of the Consolidated 
and Further Continuing Appropriations Act, 2013, Pub. L. No. 113-6 
(Mar. 26, 2013). 

[38] Council of the Inspectors General on Integrity and Efficiency, 
Quality Standards for Federal Offices of Inspector General 
(Washington, D.C.: August 2012). These quality standards also address 
operational aspects of a federal IG office, including maintaining 
human capital and receiving and reviewing allegations. 

[39] In its August 2012 version of the Silver Book, there is a 
reference to GAO's Standards for Internal Control in the Federal 
Government issued in November 1999. 

[40] GAO, Government Auditing Standards: 2011 Revision, [hyperlink, 
http://www.gao.gov/products/GAO-12-331G] (Washington, D.C.: December 
2011). 

[41] Council of the Inspectors General on Integrity and Efficiency, 
Quality Standards for Investigations (Washington, D.C.: November 2011). 

[42] Council of the Inspectors General on Integrity and Efficiency, 
Quality Standards for Inspection and Evaluation (Washington, D.C.: 
January 2012). 

[43] Pub. L. No. 95-452, 92 Stat. 1101 (Oct. 12, 1978) codified, as 
amended, at 5 U.S.C. App. 

[End of section] 

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