Six Federal Agencies Did Not Publish Initial Catch-up Inflation Adjustments through IFRs in the Federal Register as of December 31, 2016

Of the 52 federal agencies reviewed, we determined that 49 federal  agencies were required to publish IFRs with the initial catch-up inflation  adjustment amounts in the Federal Register. The remaining 6 agencies subject to the Inflation Adjustment Act that did  not publish IFRs with the initial catch-up inflation adjustment amounts by  December 31, 2016, in the Federal Register were the  1. Three Federal Agencies Did Not Report Civil Monetary Penalty Information, Including the Catch- up Inflation Adjustment of the Civil Monetary Penalty Amounts, in 2016 AFRs

Under the Inflation Adjustment Act and OMB Circular A-136, section  II.5.11, Civil Monetary Penalty Adjustment for Inflation, federal agencies  are directed to report in the 2016 AFRs information about the civil  monetary penalties within agencies’ jurisdiction, including the catch-up  inflation adjustment of the civil monetary penalty amounts, and federal  agencies must report this information if the agencies, or their subbureaus  or divisions, enforce any civil monetary penalties. Accordingly, it is  important that agencies report such information in the AFRs. While most federal agencies subject to the  Inflation Adjustment Act have followed the act’s requirements and OMB’s  guidance, some agencies did not timely publish their civil monetary  penalty catch-up inflation adjustments in the Federal Register or report  their civil monetary penalty information in the 2016 AFRs. In  addition, agencies had differing interpretations of OMB’s guidance related  to civil monetary penalty inflation adjustment implementation that could  result in inconsistent AFR reporting of civil monetary penalty adjustment  information. OMB staff generally agreed with our recommendation; however, they  suggested that we revise the recommendation to use more broad terms. We agreed with this suggestion and modified the report accordingly to  allow OMB more flexibility to meet the intent of our recommendation. Appendix I: Objectives, Scope, and Methodology

This report addresses to what extent federal agencies subject to the  Federal Civil Penalties Inflation Adjustment Act of 1990, as amended  (Inflation Adjustment Act), have complied with the requirement to   (1) publish their initial catch-up inflation adjustments in the Federal  Register and (2) report in the 2016 agency financial reports (AFR)  information about the civil monetary penalties within the agencies’  jurisdiction, including the inflation adjustment of the penalty amounts, as  directed by the Office of Management and Budget’s (OMB) guidance. To address our first objective, we obtained the population of 52 federal  agencies that could be subject to the applicable provisions of the Inflation  Adjustment Act from OMB’s summary list. We categorized federal agencies for our  first objective by determining (1) whether the agency complied with the  Inflation Adjustment Act to publish its initial catch-up inflation adjustments  by July 1, 2016, and to take effect no later than August 1, 2016;   (2) whether the agency published its initial catch-up inflation adjustments  in calendar year 2016 (i.e., no later than December 31, 2016);   (3) whether the agency is subject to the catch-up adjustment provisions of  the Inflation Adjustment Act; and (4) whether the agency had applicable  civil monetary penalties to assess or enforce. As a result, we did not make any  determination on these 8 federal agencies regarding compliance with the  AFR reporting requirement provisions of the Inflation Adjustment Act.
Why GAO Did This Study

The IAA includes a provision for GAO to annually submit to Congress a report assessing the compliance of agencies with the inflation adjustments required by the act. Specifically, GAO’s objectives were to determine to what extent federal agencies subject to the IAA have complied with the requirements to (1) publish in the Federal Register their initial catch-up inflation adjustments and (2) report in the 2016 AFRs information about civil monetary penalties, including the catch-up inflation adjustment of the civil monetary penalty amounts. GAO obtained the population of 52 federal agencies identified by OMB that could be subject to the applicable provisions of the IAA and, for those subject to the requirements, electronically searched the Federal Register and reviewed the 2016 AFRs.

What GAO Found

The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended (the IAA) calls for federal agencies to (1) adjust civil monetary penalties for inflation with an initial catch-up inflation adjustment published in the Federal Register and (2) report in the 2016 agency financial reports (AFR) civil monetary penalty information, including the catch-up inflation adjustment. The act also requires the Office of Management and Budget (OMB) to issue implementation guidance.
Most federal agencies subject to the IAA complied with the provisions of the act to publish their initial catch-up inflation adjustments in the Federal Register no later than July 1, 2016. However, certain federal agencies with civil monetary penalties covered by the IAA did not comply with the statutory requirement. GAO found that six federal agencies did not publish their civil monetary penalty initial catch-up inflation adjustment amounts by December 31, 2016. As a result of GAO inquiries, three of these six subsequently published their catch-up adjustments for inflation in the Federal Register .
In addition, most federal agencies subject to the IAA complied with the provisions of the act to report civil monetary penalty information in the 2016 AFRs, including the catch-up inflation adjustment. However, certain federal agencies with civil monetary penalties covered by the IAA did not comply with the statutory requirements. Specifically, three federal agencies did not report, in the 2016 AFRs, required information about the civil monetary penalty catch-up inflation adjustment in the 2016 AFRs.
GAO also found that OMB had not provided clear guidance regarding federal agencies' reporting on civil monetary penalty information in the AFRs. As a result, officials from federal agencies had different interpretations, which could result in inconsistent AFR reporting of such information.

What GAO Recommends

GAO recommends that (1) six federal agencies take the necessary actions to meet IAA requirements and (2) OMB clarify its guidance regarding federal agencies' reporting on civil monetary penalties in AFRs. Two of the agencies did not comment on their respective recommendations, while the remaining four all indicated that they were taking actions to address the recommendations made to them. OMB generally agreed with the recommendation addressed to it but suggested a revision to use more broad terms. GAO modified the recommendation accordingly to allow OMB flexibility to meet the intent of the recommendation.