January 10, 2007

MEMORANDUM FOR	GUY K. ZIMMERMAN ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM:	Harley G. Lappin, Director
SUBJECT:	Response to the Office of the Inspector General’s (OIG) Draft Report:  Efforts to Prevent, Identify, and Recover Improper and Erroneous Payments by Selected Department of Justice Components

The Bureau of Prisons (BOP) appreciates the opportunity to respond to the recommendations from the OIG’s draft report entitled Efforts to Prevent, Identify, and Recover Improper and Erroneous Payments by Selected Department of Justice Components.

The Bureau’s responses to the recommendations are provided below.

Recommendation #6:  Ensure future risk assessments include: 
(1) the results from the most recent financial statement audit, including any material weaknesses or reportable conditions;
(2) the effect of those weaknesses or conditions on its risk of making improper payments; and (3) a description of the corrective action taken to address those weaknesses or conditions as required by Bulletin 06-11.

Response:  The Bureau agrees with this recommendation. This information will be included on all subsequent Federal Prison Industries (FPI) risk assessments beginning in Fiscal Year 2007.

Recommendation #7:  Ensure risk assessments include:  (1) an assurance statement of an unqualified, qualified, or no-assurance opinion; (2) the reason for the opinion and its effect on the component’s risk of making improper payments; and (3) any corrective actions being taken to address the opinion and the component’s risk.

Response: The Bureau agrees with this recommendation. This information will be included on all subsequent FPI risk assessments beginning in Fiscal Year 2007.

Recommendation #15:  Implement a contract compliance review within its recovery audit program as required by Bulletin 06-11.

Response:  The Bureau agrees with this recommendation. Contract compliance review is included in the draft FPI Recovery Audit Programs and Improper Payment Information Act Program Statement.

Recommendation #16:  Implement a final policy for its recovery audit program as required by Bulletin 06-11.

Response:  FPI has drafted a policy to ensure requirements in Bulletin 06-11 have been addressed. Until the policy is finalized, FPI will issue interim guidance through a Financial Management Directive by January 31, 2007.

If you have any questions regarding this response, please contact Michael W. Garrett, Senior Deputy Assistant Director, Program Review Division, at (202) 616-2099.