	Scope and Methodology

To address our objective, we (1) obtained and reviewed the DOI OIG  audit report and supporting workpapers; (2) interviewed Foundation  management and selected staff members to determine the extent to  which its actions to improve internal controls and the Federal Managers’  Financial Integrity Act (FMFIA) assessment process have been  sufficiently documented (i.e., whether such changes have been issued in  final form or whether draft policies of planned changes have been  reviewed by senior management and the in-house General Counsel);   (3) obtained and reviewed documentation related to the Foundation’s  actions to improve internal controls and its FMFIA assessment process;  and (4) assessed the Foundation’s actions against the criteria established  under Standards for Internal Control in the Federal Government,of Management and Budget (OMB) Circular No. A-123, Management’s  Responsibility for Internal Control (December 21, 2004) (OMB Circular   Office  No. Background

The Foundation was established as an independent executive branch  agency in 1992 to honor Morris K. Udall’s 30 years of service in the U.S.  House of Representatives as a leader on issues related to the  environment and Native Americans. The DOI OIG’s audit report also found that the Foundation was missing  key internal controls over its personnel and contracting practices. Major elements of the  Corrective Action Plan include performing a complete assessment of the  Foundation’s current internal control structure to identify adequate,  inadequate, and missing controls, and developing (or contracting to have  developed) policies and procedures to implement appropriate internal  controls in all areas where inadequate or missing controls are identified.The Corrective Action Plan included steps to address deficiencies in the  Foundation’s (1) FMFIA internal control monitoring and assessment  process, (2) internal control related to its personnel processes, and   (3) internal control related to its contracting processes. For those actions  that were sufficiently documented at the time of our review, we found that  their design was consistent with internal control standards and applicable  laws and regulations, as discussed in the following sections. Foundation Actions to Improve FMFIA Internal Control Monitoring and the Assessment Process

Since the release of the DOI OIG audit report, the Foundation has  experienced significant turnover in its senior management ranks, and new  management has acknowledged that the Foundation did not (1) maintain  adequate documentation of the controls in place, (2) perform monitoring  activities that included direct testing of the controls as part of the internal  control assessment process required under FMFIA, (3) document the  assessment process and methodology that management used to support  its assertion as to the effectiveness of internal control over financial  reporting, and (4) include appropriate representations from officials and  personnel responsible for monitoring, improving, and assessing internal  controls. In addition, new management at the Foundation acknowledged  that the Foundation’s failure to comply with FMFIA requirements and  implementing OMB Circular No. Specifically, the Foundation contracted with an external  consultant to perform an internal control review with an overall goal of  achieving compliance with OMB Circular No. We determined that the  design of this action to contract for the performance of a thorough internal  control review is consistent with internal control standards related to  monitoring operations and internal controls and with FMFIA requirements  to monitor and assess the effectiveness of its internal controls. Because the Foundation’s planned actions to improve its internal controls  related to employees’ outside employment and termination of  employment were not finalized, it was too soon for us to assess the  design of these actions and whether they are consistent with internal  control standards and applicable laws, regulations, and guidance. Foundation Actions to Address Internal Control Deficiencies Related to Contracting

The bona fide needs rule is based on the Time Statute (31 U.S.C. We determined that the  design of this action is consistent with internal control standards and  applicable guidance for federal executive agencies. Specifically, the  Foundation’s interagency agreement with IBC for managing  environmental conflict resolution contracts is generally consistent with  OMB’s Office of Federal Procurement Policy (OFPP) 2008 policy  guidance on management and use of interagency acquisitions. Pursuant to the terms of the interagency agreement, IBC has agreed to  assist the Foundation on contracts related to environmental conflict  resolution activities, including mediation, facilitation, and assessment  services. Agency Comments

We provided a draft of this report to the Foundation for comment. The Foundation also  provided a summary of the changes it has made in its operations and  structure since the DOI OIG audit report.
Why GAO Did This Study

The Foundation was established as an executive branch agency to provide educational opportunities related to environmental policy and Native American health care and tribal policy, and also to assist in resolving environmental disputes that involve federal agencies. In December 2012, a DOI OIG audit of the Foundation identified significant issues primarily related to the Foundation's failure to appropriately monitor and assess the effectiveness of its internal controls as required by FMFIA and the absence of key internal controls over its personnel and contracting practices. GAO was asked to review whether the Foundation has sufficient internal controls to ensure that it is complying with applicable laws and regulations regarding financial management and contracting. The objective of this report is to describe the Foundation's actions to improve its internal control assessment process and its controls over personnel and contracting, and determine the extent to which the design of the Foundation's actions that have been sufficiently documented is consistent with internal control standards and applicable laws and regulations.
To address this objective, GAO reviewed relevant documents, interviewed Foundation management, and assessed the Foundation's actions against relevant standards and guidance.
In commenting on a draft of this report, the Foundation accepted GAO's results in full. The Foundation also provided a summary of the changes it has made in its operations and structure since the DOI OIG report.

What GAO Found

Officials at the Morris K. Udall and Stewart L. Udall Foundation (Foundation) developed a Corrective Action Plan to address the findings in the Department of the Interior (DOI) Office of Inspector General's (OIG) December 2012 audit report. The Corrective Action Plan included steps to address deficiencies in the Foundation's (1) internal control monitoring and assessment process, (2) internal control related to personnel issues, and (3) internal control related to contracting. For those actions that were sufficiently documented at the time of its review, GAO found that their design was consistent with internal control standards and applicable laws and regulations.
To address identified deficiencies in its internal control monitoring and assessment processes under 31 U.S.C. 3512(c), (d), commonly known as the Federal Managers' Financial Integrity Act (FMFIA), and implementing guidance, the Foundation contracted with an external consultant to perform an internal control review with an overall goal of achieving compliance with the Office of Management and Budget (OMB) Circular No. A-123, Management's Responsibility for Internal Control and Standards for Internal Control in the Federal Government. GAO determined that the design of this action to contract for the performance of a thorough internal control review is consistent with internal control standards related to monitoring operations and internal controls and with FMFIA requirements to monitor and assess the effectiveness of internal controls.
To address deficiencies in its internal control related to personnel issues, the Foundation developed policies and procedures to address specific DOI OIG findings in the areas of outside employment and termination of employees. The procedures were still in draft form, and it was too soon for GAO to assess the design of the changes.
To address the DOI OIG's findings related to its contracting practices, the Foundation entered into a 5-year interagency agreement with the DOI Interior Business Center (IBC), under which IBC agreed to assist the Foundation on contracts related to the Foundation's environmental conflict resolution activities, including mediation, facilitation, and assessment services. GAO determined that the design of this action is consistent with internal control standards and applicable guidance for federal executive agencies. For example, the Foundation's interagency agreement with IBC for managing environmental conflict resolution contracts is generally consistent with OMB's Office of Federal Procurement Policy guidance on management and use of interagency acquisitions. For other contracts, the Foundation planned to issue a policy and guidance on internal contracting processes, but it was not finalized at the time of GAO's review.