The total budgetary  resources of the Commission OIG increased from fiscal years 2011  through 2013, from $310,000 to $331,000, for an increase of about 7  percent (see fig. During this 3-year period, the OIG consisted of one  full-time employee, the IG, who obtained additional support through  contracts with both auditors and others to assist with his oversight  responsibilities, such as interviews related to ongoing inspections, and to  mediate disputes between Commission officials and grant recipients  regarding grant payments. Commission OIG’s Reported Work Products

During fiscal years 2011 through 2013, the Commission OIG issued six  semiannual reports to the Congress, as required by the IG Act, and  conducted 12 inspections. OIG Provided Limited Oversight of the Commission’s Major Programs and Operations

During fiscal years 2011 through 2013, the OIG provided limited oversight  of the Commission’s major programs and operations. Per the IG Act, OIG  oversight includes assessing the effectiveness and efficiency of agency  programs and operations; providing leadership and coordination to detect  fraud and abuse; and making recommendations to management to  promote the economy, efficiency, and effectiveness in the administration  of these programs. In these 2 inspections, the OIG provided oversight for $150,000 of  grant funds disbursed for training programs, all of which were reported in  fiscal year 2012. The $150,000 of grant funds inspected by the OIG  represented less than 1 percent of the total grants awarded by the  Commission during fiscal years 2011 through 2013. However, the OIG did not conduct any inspections that assessed  the effectiveness and efficiency of the agency’s other major programs— energy, transportation, and health facilities—or make recommendations  to management promoting the economy, efficiency, and effectiveness in  the administration of these programs, which is one of the major OIG goals  established in the IG Act. OIG Oversaw the Commission’s Annual Financial Statement Audit but Did Not Conduct Audits or Investigations of Commission Programs

As part of its oversight duties, the OIG is responsible for selecting and  overseeing the IPA responsible for performing the Commission’s annual  financial statement audit. OIG Did Not Have Documented Policies and Procedures for Office Operations and Management, and Its Work Products Did Not Fully Adhere to Professional Standards

Our review of the OIG’s policies and procedures in place during fiscal  years 2011 through 2013 found that the OIG did not document its policies  and procedures for its management and operations as an OIG. However, the  Commission OIG did not implement the following four quality standards  that are critical for the management and operations of the OIG: planning  and coordinating, maintaining quality assurance, ensuring internal control,  and receiving and reviewing allegations. We found that the OIG did not prepare an annual work plan or strategic  plan. Additionally, we found no documented evidence in  the OIG’s workpapers to support the inspection conclusions and  recommendations for its reports. Although the limitations of a single- person office can create challenges to developing and implementing  policies and procedures to ensure effective oversight, if corrective actions  are taken to address the issues identified in this report, the current DFE  OIG structure can provide a viable option for oversight of the  Commission. Consolidation into a Larger IG Office

The Commission OIG could be consolidated into a larger IG office. This option would consolidate the  Commission OIG with a regional commission OIG. Another alternative is to divide OIG  oversight responsibilities for the agency performance audits,  investigations, and inspections and the agency financial statement audits  between two separate federal OIGs, such as a regional commission OIG  or a larger OIG. Implement the OIG’s policies and procedures developed in  accordance with CIGIE’s Quality Standards for Federal Offices of  Inspector General to ensure that the OIG’s management and  operation of its office includes the following: annual work and strategic plans that identify goals, objectives, and  performance measures to be accomplished by the OIG within a  specific period; a quality assurance framework that includes both internal and  external quality assurance reviews; an internal control structure that includes all elements of internal  control, such as the control environment, risk assessment, control  activities, information and communication, and monitoring; and an OIG hotline to receive and review anonymous tips, referrals,  and allegations to help prevent and detect potential fraud, waste,  and abuse. The Commission concurred with the report’s conclusions  and recommendations, and provided its perspective of the IG’s  performance as well as the challenges for a one-person DFE OIG. To determine the extent to which the IG provided oversight of the  Commission’s major programs and operations, we compared the grant  funds awarded and disbursed by the Commission for fiscal years 2011  through 2013 to the work products issued by the OIG. To determine whether the design of the OIG’s policies and procedures  adhered to applicable professional standards, we reviewed the Inspector  General Act of 1978, as amended (IG Act), and the Council of the  Inspectors General on Integrity and Efficiency’s (CIGIE) Quality  Standards for Federal Offices of Inspector General and Quality Standards  for Inspection and Evaluation, and compared the OIG’s inspection  policies and procedures to these professional standards.
Why GAO Did This Study

The Commission was established to promote sustainable infrastructure improvement, job training, and other economic development services in Alaska. The Commission is a designated federal entity under the IG Act and is required to have an IG. IG oversight includes assessing the effectiveness and efficiency of agency programs and operations; providing leadership and coordination to detect fraud and abuse; and making recommendations to management to promote the economy, efficiency, and effectiveness of program and agency operations. GAO was asked to review the management and operations of the Commission's OIG. GAO's objectives were to (1) identify the resources appropriated to and expensed by the OIG and the OIG's work products reported for fiscal years 2011 through 2013, (2) assess the extent to which the OIG provided oversight of the Commission's programs and operations, (3) determine the extent to which the design and implementation of the OIG's policies and procedures and its work products were consistent with professional standards, and (4) identify alternatives for OIG oversight of the Commission.

What GAO Found

The Denali Commission (Commission) Office of Inspector General (OIG) received budgetary resources of approximately $1 million from fiscal years 2011 through 2013. OIG budgetary resources increased approximately 7 percent from fiscal years 2011 through 2013, from approximately $310,000 to $331,000. During this period, the OIG consisted of one full-time employee, the Inspector General (IG), who obtained additional support through contracts with auditors and others. The OIG issued six semiannual reports to the Congress and conducted 12 inspections during fiscal years 2011 through 2013.
The OIG provided limited oversight of the Commission's major programs (energy, transportation, health facilities, and training) and operations. GAO's analysis of the 12 inspections completed by the OIG found that the OIG provided oversight for $150,000 of the $167 million in grant funds disbursed during fiscal years 2011 through 2013. The $150,000 of grant funds inspected by the OIG represented less than 1 percent of total grants awarded by the Commission during this period. The $167 million in disbursed grant funds are subject to the Single Audit Act, as applicable. While the OIG oversaw the Commission's annual financial statement audit, it did not conduct any performance audits or investigations related to the Commission's major programs and operations.
The OIG did not have documented policies and procedures for its office operations and management that adhered to the Council of the Inspectors General on Integrity and Efficiency's Quality Standards for Federal Offices of Inspector General . The OIG did not implement the following four quality standards that are critical for the management and operations of the OIG: planning and coordinating; maintaining quality assurance; ensuring internal control; and receiving and reviewing allegations of potential fraud, waste, and abuse. For example, the OIG did not conduct any investigations for potential criminal prosecution. Also, the OIG did not prepare an annual work or strategic plan to document the office's planned activities. Additionally, the OIG's work products were not fully consistent with applicable professional standards, its own policies and procedures for inspections, or section 5 of the Inspector General Act of 1978, as amended (IG Act). For example, there was insufficient evidence in the OIG's inspection case files to support the conclusions and recommendations reported, and the semiannual reports prepared by the OIG did not provide information on the status of OIG recommendations as required by the act.
If corrective actions are taken to mitigate the challenges faced by a one-person office, the current structure of the Commission OIG is one option for OIG oversight. GAO has also identified three alternative OIG oversight structures that could be applied to the Commission: (1) consolidation into a larger OIG; (2) consolidation into a regional commission OIG; and (3) division of OIG oversight responsibilities between two separate federal OIGs, such as a regional commission OIG or a larger OIG.
The Commission IG resigned on December 28, 2013. On May 28, 2014, the Commission entered into an agreement with the Department of Commerce's OIG to provide oversight services pursuant to the IG Act. The agreement expires on September 30, 2014, but may be extended or amended by mutual written consent of the parties.

What GAO Recommends

GAO is making nine recommendations to the OIG to improve the operating effectiveness and efficiency of the OIG, including steps that the OIG should take to develop and implement policies and procedures consistent with professional standards to provide oversight of Commission programs and operations.
The Commission concurred with the report's conclusions and recommendations.