Federal Reports

This report details the Office of Inspector General's Fall 2018 Semiannual Report to Congress. The following topics are included:Overview of the SBA and the OIGSmall Business Access to CapitalDisaster Loan ProgramProcurement AssistanceAgency ManagementOther Significant OIG ActivitiesStatistical HighlightsAppendices

This is the first semiannual report issued since the U.S. Senate confirmed Michael K. Atkinson as the Inspector General of the Intelligence Community on May 14, 2018. Completed reports issued during the review period pertain to IC Freedom of Information Act programs and ODNI’s payment programs. This report also discusses the establishment of the Center for Protected Disclosures.

Semiannual Report to Congress: Covering April 1, 2018 - September 30, 2018

Returns on Postal Service retirement investments have declined in recent years. More importantly, Postal Service retirement investments offer only limited protection against higher inflation. Unlike fixed-rate Treasury securities, however, Treasury Inflation-Protected Securities (TIPS) investments increase in step with inflation, thereby countering the effects of higher inflation on underfunded liabilities. Our objective was to determine the impact of investing Postal Service retirement fund assets in TIPS.

The objective of our audit was to assess the effectiveness of controls over paid tort claims in the Capital and Houston districts. We selected the Capital and Houston districts for audit based on the highest number and cost of tort claim payments of the high-risk districts in FYs 2016 and 2017.

The Penobscot Indian Nation (Penobscot Nation) did not meet all Federal and Tribal health and safety requirements for the quality of health care at the Penobscot Nation Health Department (PNHD). Specifically, we found that PNHD did not have a physician who provided the medical direction for the health center and performed all of the required oversight duties, written patient care policies and procedures (including pain-management and opiate-dependency treatment and compliance monitoring), and other policies and procedures needed to comply with the requirements.

The Postal Service offers no-fee post office (PO) box service to customers who do not receive any form of carrier delivery. Customers apply for the no-fee PO box service by completing an application and providing identification to a Postal Service employee. Retail personnel determine customer eligibility and enter data into the Web Box Activity Tracking System (WebBATS), a web-based application that allows retail personnel to manage PO box inventory. Our objective was to determine whether internal controls over no-fee PO boxes were effective to ensure only eligible customers received the service.

The VA Office of Inspector General (OIG) contracted with the independent public accounting firm, CliftonLarsonAllen LLP (CLA), to audit VA’s financial statements as of September 30, 2018 and 2017, and for the fiscal years (FY) then ended. This audit is an annual requirement of the Chief Financial Officers Act. CLA provided an unmodified opinion on VA’s financial statements for FYs 2018 and 2017. With respect to internal control, CLA identified five material weaknesses: (1) community care obligations, reconciliations, and accrued expenses; (2) financial systems and reporting; (3) information technology security controls; (4) compensation, pension, burial, and education actuarial estimates; and (5) entity level controls including chief financial officer organizational structure. CLA further identified two significant deficiencies: (1) loan guarantee liability; and (2) procurement, undelivered orders, accrued expenses, and reconciliations. CLA also reported VA’s substantial noncompliance with federal financial management systems requirements and the United States Standard General Ledger at the transaction level under the Federal Financial Management Improvement Act. CLA noted improvements were needed to fully comply with the intent of the Federal Managers’ Financial Integrity Act. They cited instances of noncompliance with Title 38 United States Code §5315 pertaining to the charging of interest and administrative costs and Title 38 United States Code §3733 pertaining to the vendee loan program. They noted VA reported one violation of the Antideficiency Act and was in the process of reporting a second one. VA identified five other violations carried forward from prior years that are under further discussion. They also noted noncompliance with the Improper Payments Elimination and Recovery Act for FY 2017, as reported by the OIG. CLA made recommendations for addressing each of the material weaknesses and significant deficiencies. CLA is responsible for its audit report dated November 26, 2018, and the conclusions expressed in it.

The Privacy Office did not have controls to ensure that it timely and effectively processed Family Educational Rights and Privacy Act (FERPA) complaints during our audit period. The Privacy Office had a longstanding and substantial backlog of unresolved FERPA complaints that prevented timely and effective resolution of new complaints it received. It also had a number of significant control weaknesses that hampered its ability to resolve FERPA complaints. Unresolved FERPA policy questions have also affected the Privacy Office’s ability to resolve certain complaints. The Privacy Office placed many of these complaints into an indefinite inactive status as a result. The Privacy Office could not precisely quantify the unresolved complaint backlog due to weaknesses in its tracking process, but Privacy Office officials estimated they were about 2 years behind on complaint investigations. The Privacy Office had an opportunity to eliminate, or at least significantly reduce, the complaint backlog beginning in FY 2015 when it received authority to hire several additional staff for the student privacy function. Despite highlighting elimination of the significant complaint backlog as one of the primary benefits of increasing its staffing level, the Privacy Office dedicated the majority of the new staff it obtained to performing FERPA work unrelated to resolving existing complaints, such as providing technical assistance, training, and guidance on best practices. Although these other FERPA activities are important and can lead to fewer complaints in the future, it is critical that the Privacy Office focus its attention on eliminating or reducing the backlog to ensure it is meeting its legal obligation to timely and effectively resolve FERPA complaints and reduce the risks to students and the Department caused by substantial delays in resolving complaints. The Privacy Office does not have a plan to eliminate the complaint backlog despite characterizing the backlog as among its highest management priorities.