The Inspector General Act of 1978 (IG Act), as amended, provides the legal  foundation for the federal executive branch IG offices. USITC IG Conducted Limited Oversight Activities during Fiscal Years 2005 through 2009

The IG Act requires IGs to provide independent audits and investigations  of the programs, offices, and activities of their respective federal entities. The IG office’s  oversight of USITC consisted primarily of monitoring and reviewing the  work of independent public accountants (IPA) who conducted mandatory  audits of USITC’s financial statements and information security as  required by specific statutes. The most recent peer review  of the IG office’s audit quality, performed by the National Archives and  Records Administration IG, concluded in a May 12, 2010, report that an  opinion could not be expressed on the audit organization because no  audits had been conducted in the past 5 years. The USITC IG office also did not provide audits or perform follow-up in  areas with weaknesses identified by the IPAs’ audits. USITC Lacked an Appointed IG and Adequate Staff Resources Prior to Fiscal Year 2010

The IG Act requires designated entity heads to appoint an IG and provide  adequate budgetary resources and sufficient staff for the IG’s office to  conduct independent audits and investigations. This contributed  significantly to the IG office’s limited oversight of USITC and the lack of  audits and investigations. However, in fiscal year 2010, the USITC  Chairman appointed an IG and provided additional resources to the IG  office due, in part, to the requirements of the IG Reform Act. The USITC IG Position Was Filled by Acting and Temporary IGs for an Extended Period before Appointment of the Current IG

For over 4 years, between November 2005 and December 2009, the USITC  relied on acting IGs and a temporary IG to provide oversight. In addition,  for a period of 17 months during this time—from March 2006 until August  2007—the USITC IG position was vacant. Despite increases in the overall USITC budget, the IG  office’s budget resources remained relatively flat and its staffing remained  below its authorized levels. The acting and temporary IGs had not prepared  comprehensive audit plans over the 5-year period with a staffing analysis  to justify additional budget and staffing resources and effectively  communicate their resource needs. The current IG stated that future oversight may require  additional resources. In addition, the IG is required  to refer cases with potential violations of federal criminal law to the  Attorney General. During our review period, we found  instances where USITC’s governance structure did not fully support the  acting and temporary IGs’ responsibilities due to USITC’s lack of clear  policies surrounding IG access to information and the lack of coordination  with the IG office when referring an investigative case to the Department  of Justice (DOJ). We recommend that the Chairman of USITC  revise the policies and procedures for all offices and programs to  recognize the authorities and responsibilities of the IG under the IG  Act, including procedures for recognizing the IG’s authority for access  to USITC documents, records, and information;  revise the formal written orientation information provided to the  Commissioners to include sections on  the overall authorities and responsibilities of the IG;  the IG’s authority and USITC’s policies for IG access to USITC  documents, records, and information; and  the responsibilities of the Chairman to maintain an appointed IG;  and    work with the IG to establish a memorandum of understanding (MOU)  or similar mechanism to ensure that all USITC investigative matters  that may cover areas also investigated by the IG are coordinated with  the IG’s office. The Chairman  concurred with our recommendations and identified actions taken to  implement them. Appendix I: Scope and Methodology

To determine the extent of oversight provided by the U.S. International  Trade Commission (USITC) Inspectors General (IG) during fiscal years  2005 through 2009, we obtained and reviewed the results of the IGs’ audit  reports and investigative activity as reported in the IGs’ semiannual  reports to Congress for the 5-year period. To determine how the role of the IG is addressed in the governance and  management of USITC, we reviewed existing policies and procedures  regarding the governance and management of USITC for accountability  and regarding the IG; interviewed the Commissioners; and obtained  information from the former acting and temporary IGs as well as the  current IG.
Why GAO Did This Study

Inspectors general (IG) are to provide independent and objective oversight; however, the United States International Trade Commission (USITC) has relied on acting and temporary IGs for an extended period of time. GAO was asked to determine (1) the extent of oversight provided by the USITC IG, (2) the budget and staffing resources available for oversight, and (3) how the role of the IG is addressed in the governance of USITC. To accomplish these objectives, GAO reviewed USITC IG reports and budgets for fiscal years 2005 through 2009, and relevant policies and procedures regarding governance and accountability. GAO also interviewed the USITC Chairman, Commissioners, current and former acting and temporary IGs, and office directors.

What GAO Found

The IG Act of 1978, as amended (IG Act), requires IGs to provide independent audits and investigations of the programs, offices, and activities in their respective federal entities. However, during the 5-year period reviewed, the USITC IG office conducted no audits and had no investigative case files or investigative reports of USITC. The IG office's oversight activities consisted primarily of monitoring and reviewing the work of independent public accountants (IPA) who conducted annual mandatory audits of USITC's financial statements and information security programs and practices. The most recent peer review of the USITC IG office's audit quality concluded that an opinion could not be rendered on the audit organization because no audits had been conducted by the IG in the past 5 years. The IG Act requires the designated federal entity heads to appoint an IG and provide adequate budgetary resources and sufficient staff. Both the lack of an appointed IG and constrained IG office budgets and staffing resources contributed to the limited oversight of USITC. From November 1, 2005, through December 5, 2009, USITC relied on acting IGs and a temporary IG to provide oversight. During this period the IG position was vacant for 17 months with no acting or temporary IG while USITC relied on the Assistant IG for Audits to provide oversight. Between fiscal years 2005 and 2009, the USITC budget increased about 23 percent, but the IG office budget resources remained relatively flat with funds only available for IPA-conducted audits and two staff during the last 4 years reviewed. The lack of comprehensive audit plans by the acting and temporary IGs to fully communicate their resource needs to USITC contributed to inadequate IG office resources and resulted in limited oversight. In fiscal year 2010, USITC appointed a Senior Executive Service-level IG to address requirements of the IG Reform Act of 2008. Also, consistent with the act, USITC provided a fiscal year 2010 IG office budget based on discussions with the current IG, which increased staffing and was certified by the IG as adequate. The IG stated that future oversight may require additional resources, which we believe can be communicated and justified by a staffing analysis as part of IG audit planning. The IG Act provides each IG with protections of independence including the authority for access to all entity documents and records. In addition, the IG is required to refer cases with potential violations of federal criminal law to the Attorney General. We found instances where the governance structure did not fully support the temporary USITC IG's responsibilities. Specifically, during 2009, the temporary IG was unable to obtain timely access to sensitive contract documents because USITC's policies and procedures did not clearly provide for IG access to such documents. The orientation book for the Commissioners, who may not have prior federal service, does not contain information about the USITC IG's authorities and responsibilities. In another instance, due to the lack of a formal policy or other agreement with the IG office, the Chairman referred the results of a possible criminal investigation to the Department of Justice (DOJ) without coordinating with the temporary IG, resulting in the potential for duplication of investigative efforts.

What GAO Recommends

GAO is making a recommendation to the USITC IG to prepare a staffing analysis as part of audit planning to determine the resources needed for effective oversight of USITC. GAO is also making recommendations to the USITC Chairman aimed at clarifying and communicating the authorities and responsibilities of the IG. In comments on a draft of the report, the USITC Chairman concurred with GAO's recommendations and stated corrective actions had been implemented. GAO agrees that one recommendation was fully implemented; however, additional actions are required to implement the remaining recommendations.