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Bureau of Land Management: Improvements Needed in Internal Controls over Mining Law Administration Program Funds

GAO-15-562 Published: Jul 23, 2015. Publicly Released: Jul 29, 2015.
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Highlights

What GAO Found

The Department of the Interior's (Interior) Bureau of Land Management's (BLM) Mining Law Administration Program (mining law program) was appropriated and expended almost $40 million annually from fiscal years 2011 through 2013. Funds are to be used for mining law program activities such as administering mining claims and processing notices for mineral exploration. The mining law program's largest expenditures include personnel compensation and contractual services and supplies, which account for over 96 percent of its expenditures.

BLM has designed internal controls, including policies and procedures over mining law program funds, but some of them are inconsistent, outdated, and not effectively communicated. GAO's statistical tests of fiscal year 2013 nonpayroll mining law program expenditures showed that BLM did not effectively implement controls to reasonably assure that such mining law program transactions were properly recorded and supported.

Estimated Percentages of Control Deficiencies in Nonpayroll Expenditures of the Mining Law Administration Program (Mining Law Program) for Fiscal Year 2013

Estimated Percentages of Control Deficiencies in Nonpayroll Expenditures of the Mining Law Administration Program (Mining Law Program) for Fiscal Year 2013

Note: All percentage estimates from the tests have margins of error at the 95 percent confidence level of plus or minus 9 percentage points or less.

In addition, in interviews conducted at selected BLM offices, GAO found that some employees were charging hours of work to the mining law program based on funding allocations or supervisor instructions rather than the actual work performed, as required by BLM policies. While these examples cannot be generalized to all BLM employees, they illustrate control deficiencies that increase the risk that BLM employees are not charging the program correctly.

GAO found that internal control implementation deficiencies were the result of design flaws in BLM's policies and procedures as well as the lack of training and monitoring to reinforce them. Because of these deficiencies, BLM does not have reasonable assurance that mining law program expenditures relate to or are reasonably allocated to the program. As a result, the information in BLM's financial records may be at risk of not reflecting the actual cost of the mining law program.

Why GAO Did This Study

BLM's mining law program is responsible for managing the exploration and development of minerals, such as gold, silver, and copper, on federal land. The program is funded through fees collected from holders of mining claims and sites, subject to limits in annual appropriations acts, and is appropriated funds from the Department of the Treasury to the extent that the actual fees collected fall short of such limits.

GAO was asked to review the funding and spending of the mining law program. This report discusses (1) the amounts appropriated and expended for the program and (2) the extent to which BLM designed and implemented internal controls to reasonably assure that designated funds are spent only on mining law program operations. To address these objectives, GAO (1) reviewed relevant BLM policies and procedures and financial data, (2) conducted tests on a statistical random sample of fiscal year 2013 nonpayroll expenditures, and (3) interviewed BLM officials and employees.

Recommendations

GAO recommends that BLM (1) review and update its mining law program policies and procedures, as necessary; (2) establish procedures for communicating such changes; (3) develop and implement a related training program; and (4) regularly monitor compliance with its policies and procedures. Interior generally agreed with the findings, concurred with GAO's recommendations, and described actions taken or planned to address each recommendation.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Interior To strengthen BLM's controls and reasonably assure accountability over mining law program expenditures, both payroll and nonpayroll, the Secretary of the Interior should direct the Director of the Bureau of Land Management to perform a comprehensive review of applicable temporary directives, including instruction memorandums, related to mining law program expenditures and update or incorporate them into permanent policies in BLM's Fund Coding Handbook or relevant manuals, as appropriate.
Closed – Implemented
The Department of Interior's (DOI) Bureau of Land Management (BLM) performed a comprehensive review of its policies for mining law program expenditures, which resulted in DOI BLM updating its (1) Fund Code Handbook (dated August 2016) to, among other things, reflect agency's current policy on the appropriate expenditures of Mining Law Administration Program (MLAP) funds; (2) BLM Manual MS-3800 to reinforce the policy for expenditures of MLAP; and (3) Annual Work Plan (AWP) Directive to provide specific direction to ensure that appropriated dollars for all BLM programs, including the MLAP, are properly expended and recorded in the BLM's financial systems for all BLM offices. DOI officials indicated that the issuance of the updated Fund Code Handbook and BLM Manual MS-3800 precluded the need for the instruction memorandums, which were also mentioned in the recommendation. We reviewed DOI BLM's updated policy documentation and believe that DOI's BLM has addressed our recommendation.
Department of the Interior To strengthen BLM's controls and reasonably assure accountability over mining law program expenditures, both payroll and nonpayroll, the Secretary of the Interior should direct the Director of the Bureau of Land Management to establish procedures for regular and timely communication to all BLM employees on policy and procedural changes affecting the mining law program's expenditure-related processes.
Closed – Implemented
The Department of Interior's (DOI) Bureau of Land Management (BLM) agreed with our recommendation. In our prior year recommendation update, we previously credited BLM for revising its guidance (including its Fund Code Handbook) for communicating policy and procedural changes affecting the mining law program's expenditure-related processes. However, we communicated to BLM in fiscal year 2019 that the findings in the report were caused in part by inadequate communication processes and the accessibility of the guidance to staff. To address the recommendation, we informed BLM that we would like to see evidence that BLM has established procedures to ensure proper communication of changes or policies to its staff using BLM guidance, which includes having written procedures on how BLM publishes updates or communicates policy information, where guidance should be published in BLM's internal page, and the BLM officials who are in charge of that process. In September 2020, BLM provided us its Permanent Instruction Memorandum (PIM) titled, Fund Code Handbook -Improving Communication and Program Accountability (PIM-2020-006) (dated August 13, 2020). We have reviewed the PIM and believe it demonstrates that BLM has established oversight roles and responsibilities for communicating changes to the BLM Fund Code Handbook and with enforcing the Fund Code Handbook compliance requirements. For example, the PIM establishes procedures for publishing the Fund Code Handbook in BLM's Directive system, posting it on the Headquarters Budget Office's SharePoint site, and timely disseminating it to BLM employees within five calendar days of the issuance date. The PIM also requires all BLM employees to comply with the Fund Code Handbook at all times when performing their work, and requires headquarters budget officers to develop internal control procedures to ensure that transactions are correctly recorded and reported. These activities show that BLM has met the intent of the recommendation.
Department of the Interior To strengthen BLM's controls and reasonably assure accountability over mining law program expenditures, both payroll and nonpayroll, the Secretary of the Interior should direct the Director of the Bureau of Land Management to develop and implement a training program that provides all BLM employees with an understanding of the use of the mining law program funds to reasonably assure uniform application and effective execution of BLM policies and procedures. This training, to be successful, should be provided to all BLM employees who charge the program and communicate clear instructions on how employees should charge, document, and review transactions related to mining law program expenditures.
Closed – Implemented
The Department of Interior's (DOI) Bureau of Land Management (BLM) agreed with our recommendation. In fiscal year 2018, BLM provided support that demonstrates it has provided training to staff in its effort to address the recommendation. Specifically, BLM developed an online training in fiscal year 2017 course titled, "Appropriate Use of Mining Law Administration Program (MLAP) Funds." The course outlines the use of the MLAP sub-activity in accordance with the BLM Fund Coding Handbook (H-1684-1), and details how to properly identify costs that should be coded to the sub-activity. On August 23, 2017, BLM also issued Instruction Memorandum 2017-105 titled, "Mining Law Administration Program Funds-Appropriate Use Training," which directs the mandatory training of BLM employees who charge labor or purchases to the MLAP sub-activity. The training course record demonstrates how the BLM has implemented the recommendation based on a 94.5 percent completion rate of staff completing the training as of May 24, 2018. From our review of BLM's training material, we believe between the general goals expressed in the training material and the detailed examples provided within the training material that BLM has met the primary intent of our recommendation - which was to enhance employees' understanding of the appropriate uses of MLAP funds. We believe this training would also give reviewing officials a better understanding of MLAP requirements and various scenarios that they may face in reviewing transactions. We believe that DOI's BLM's actions have addressed our recommendation.
Department of the Interior To strengthen BLM's controls and reasonably assure accountability over mining law program expenditures, both payroll and nonpayroll, the Secretary of the Interior should direct the Director of the Bureau of Land Management to develop and implement internal control activities for regularly monitoring compliance with expenditure-related policies and procedures in the mining law program. These activities should, at a minimum, (1) determine whether transactions were recorded to the correct subactivity and verified by an approving official and (2) assure that documentary evidence of review is maintained, as required in BLM's policies and procedures.
Closed – Implemented
The Department of Interior's (DOI) Bureau of Land Management (BLM) agreed with our recommendation. We verified that, In fiscal year 2017, BLM (1) developed procedures to annually monitor compliance with policies for expenditure transactions related to the mining law program and (2) performed tests of non-payroll transactions by examining the non-labor expenditures, focusing specifically on charge cards and Federal travel . In addition, we verified that in fiscal year 2018, BLM expanded its procedures by examining payroll and non-payroll transactions . We believe that DOI's BLM has addressed our recommendation.

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Topics

Appropriated fundsCopperDocumentationFederal property managementExplorationFinancial managementInternal controlsLand managementMineral resourcesMiningPrecious metalsProgram managementPublic landsUse of fundsPolicies and procedures