Federal Reports

Under a contract monitored by this office, the Office of the Inspector General engaged Castro, an independent public accounting firm, to perform the Fiscal Year 2025 Independent Evaluation of the Smithsonian Institution’s Information Security Program. 
 

Smithsonian Enterprises (SE) oversees the majority of the revenue-generating operations of the Smithsonian Institution
(Smithsonian). It is an essential source of unrestricted funds— monies without donor-imposed or legal restrictions on their use. SE provides unrestricted funds to the Smithsonian through the operation of revenue-generating activities.
In SE's fiscal year (FY) 2023, SE generated $150.8 million in net revenue, including more than $63 million from 32 retail stores, approximately $10.7 million of which were cash transactions.

OIG made four recommendations for Smithsonian Enterprises management to improve compliance with policies and procedures related to document retention, audits over cash management, system access for separated employees, and discounts. Management concurred with all four recommendations.

The OIG received a hotline allegation that the Veterans Service Center manager at the Philadelphia VA Regional Benefit Office permitted a senior veterans service representative (VSR) to “blindly” approve hundreds of rating decisions for disability benefits claims each day without conducting the required reviews. The OIG team substantiated the allegation. From at least fiscal year 2022 through 2024, this senior VSR authorized about 85,300 claims—about 19 times the national average. The senior VSR spent an average of 4.7 minutes reviewing each claim authorized during this three-year period, versus a national average of about 21 minutes. The OIG obtained data showing that the senior VSR rarely opened necessary documents to verify claim information prior to authorization. The senior VSR contributed more than 35 percent each year toward the regional office’s claims completions goal, a metric that is part of regional office executive directors’ performance standards.

Based on the results of a statistical sample of 32 rating decisions that the senior VSR authorized from January 1, 2024, through June 30, 2024, the team estimated that approximately 13,200 decisions (84 percent) had at least one error. Some of the errors likely occurred because the senior VSR did not open and review the necessary documents. Monetary impact errors resulted in an estimated $2.2 million in improper payments during this period.

Officials from the regional office, the Northeast District, and the central office were aware of the Philadelphia senior VSR’s unusually high authorization rate. However, they overlooked opportunities to strengthen internal controls and effectively respond to the associated risks. The OIG recommended the under secretary for benefits review the errors the OIG team identified, correct these errors, and evaluate the effectiveness of controls for authorization rate outliers.

Our Objective(s)
To determine (1) whether Cherry Bekaert LLP's work complied with the Single Audit Act of 1984, as amended, and the Office of Management and Budget's Uniform Guidance, and the extent to which we could rely on the auditor's work on the U.S. Department of Transportation's (DOT) major program, and (2) whether the Chesapeake Bay Bridge and Tunnel District's (CBBT) reporting package complied with the reporting requirements of the Uniform Guidance.

About This Report
During the fiscal year that ended on June 30, 2023, CBBT expended approximately $338.5 million from a DOT program. Cherry Bekaert determined DOT's major program was OST's Transportation Infrastructure Finance and Innovation Act program. We performed a quality control review on the single audit conducted by Cherry Bekaert to verify compliance with all Federal laws and regulations.