While many of the OIG’s audits, reviews, and investigations are specific to a particular component of the Department, other work spans more than one component and, in some instances, extends to Department contractors and grant recipients. The following describes OIG audits, reviews, and investigations that involve more than one Department component.
Reports Issued
Audit of the Department’s Terrorist Watchlist Nomination Processes
The OIG’s Audit Division examined the Department’s processes for nominating known or suspected terrorists to the consolidated terrorist watchlist. The FBI is the only Department component that formally nominates individuals to the consolidated terrorist watchlist. Between January 1, 2005, and November 29, 2007, the FBI processed over 8,000 watchlist nominations.
Our audit found that the FBI has developed a formal policy for nominating known or suspected terrorists to the watchlist, has sound record management procedures for its standard watchlist nominations, and has provided basic training on the watchlist nomination process to its staff. In addition, we found that the FBI has established criteria and quality controls to assist in developing proper and accurate watchlist nominations.
However, we found that FBI case agents did not always update watchlist records when new information became known, and the FBI did not always remove watchlist records when it was appropriate. Moreover, watchlist nomination submissions from FBI field offices often were incomplete or contained inaccuracies, which caused delays in the nominations process. Additionally, FBI field offices at times bypassed FBI headquarters and the FBI’s internal controls by submitting nominations directly to the National Counterterrorism Center (NCTC). This practice may affect the completeness of FBI records that support the nominations forwarded for inclusion on the watchlist.
Although the FBI is the only component that officially nominates individuals for inclusion on the consolidated terrorist watchlist, other components – such as ATF, BOP, DEA, and USMS – have the potential to obtain terrorist-related information through their day-to-day operations and are required to share terrorism information with the FBI. However, at least one component (ATF) did not categorize criminal activity as being terrorism-related in a manner similar to the FBI, most notably in cases of domestic terrorism. As a result, the potential exists for terrorism information to not be shared with the FBI and for terrorists to not be watchlisted.
Another issue that arose during our audit related to the FBI, DEA, and U.S. National Central Bureau of Interpol (USNCB) preparing and disseminating terrorist-related intelligence reports throughout the intelligence community. Although these agencies did not intend for their reports to be treated as official watchlist nominations, the NCTC used information from these intelligence reports to create watchlist records that were sourced to the FBI, DEA, and USNCB. However, because the agencies were not aware of this NCTC practice, they did not monitor these records to ensure that they were updated or removed when appropriate.
Finally, we found that although components are heavily involved in watchlisting and actively sharing terrorist information, these activities have been developed independently and are not coordinated by the Department. We recommended that the Department consider promulgating policy related to nominations to the consolidated terrorist watchlist and the sharing of information that might result in such a nomination. Such a standardized framework would allow other entities in the Intelligence Community, such as NCTC, to better understand the intent of, and act appropriately upon, the information received from Department components.
We made seven recommendations regarding nominations to the consolidated terrorist watchlist and the sharing of terrorism-related information. The components agreed with our findings and recommendations.
The Department’s Key Indicators
The OIG’s Audit Division examined the Department’s key indicators that are used to measure annual progress toward achieving the four broad strategic goals contained in the Department’s Strategic Plan for FYs 2003‑2008. The Department’s key indicators cover a broad range of measurements, including the number of terrorist acts committed by foreign nationals against U.S. interests within U.S. borders, the number of priority drug trafficking organizations disrupted and dismantled, the percent reduction in the DNA backlog, and the rate of assaults in federal prisons.
We concluded that components reporting on 12 of the 21 key indicators audited had adequate data collection and storage processes, sufficient data validation and verification processes, and complete and accurate disclosure of data limitations. However, we identified deficiencies and issues related to the remaining nine key indicators that could, and in some cases did, result in the inaccurate collection and reporting of data.
For example, we found that the FBI was not accurately reporting the number of child pornography websites or web hosts shut down as a result of its investigative efforts because it was counting the number of subpoenas it served on the web hosts rather than the number of actual sites that were shut down as a result of the subpoenas. We also found that the Department was not accurately reporting the percent of civil and criminal cases that were favorably resolved because USAOs and the litigating divisions were using different case disposition dates and at times were reporting the same cases, which resulted in double counting. In addition, the Department was not accurately measuring the reduction of homicides per site funded under its Weed and Seed Program because it was using data that included different grantees from year to year and thus were not comparable to draw a conclusion about yearly changes in the crime rate.
In response to our findings, the Department and affected components took action to modify its key indicator numbers for its FY 2007 Performance and Accountability report. We also made 12 recommendations to components and the Justice Management Division to help improve the data collection, storage, validation, and verification processes and data limitation disclosures for the Department’s key indicators. The Department and the components agreed with our recommendations.
Civil Rights and Civil Liberties Complaints
Section 1001 of the USA Patriot Act directs the OIG to receive and review complaints of civil rights and civil liberties abuses by Department employees, to publicize how people can contact the OIG to file a complaint, and to submit a semiannual report to Congress discussing our implementation of these responsibilities. In February 2008, the OIG issued its 12th report summarizing its Section 1001 activities during the period from July 1, 2007, to December 31, 2007.
The OIG’s most recent report described the number of complaints we received under this section, the cases that were opened for investigation, and the status of these cases. In addition, the report described the status of the OIG’s follow-up reviews of the FBI’s use of national security letters and Section 215 orders for business records in 2006.
The report described other OIG reviews that examined civil rights and civil liberties-related issues, including an audit of the Terrorist Screening Center; an audit of the Department’s Watchlist Nomination Process; and a review of FBI employees’ observations and actions regarding alleged abuse of detainees at Guantanamo Bay and in Iraq and Afghanistan.
The Department’s Financial Statement Audits
The Chief Financial Officers Act of 1990 and the Government Management Reform Act of 1994 require annual financial statement audits of the Department. The OIG’s Audit Division oversees and issues the reports based on the work performed by independent public accountants. During this reporting period, we issued the report for the Department’s Annual Financial Statement for FY 2007.
The Department received an unqualified opinion on its FY 2007 and 2006 financial statements. For FY 2007, the Department had two significant deficiencies at the consolidated level, compared to one material weakness and one reportable condition for FY 2006. Effective for FY 2007, the term “reportable condition” was changed to the term “significant deficiency,” and new definitions of material weakness and significant deficiency were introduced in U.S. government auditing standards.
Both of the Department’s significant deficiencies are repeat issues, which were reported as one material weakness and one reportable condition in FY 2006. For FY 2007, weaknesses in the general and application controls for each of the Department’s component financial systems were reported as a significant deficiency, with the exception of the FBI where it was classified as a material weakness. The Department’s significant deficiency related to financial reporting and includes several serious but isolated issues, including the USMS’s financial accounting and reporting quality-control and assurance and funds management controls; ATF’s accounts payable process; Office of Justice Programs’ (OJP) grant advance and payable estimation process and grant deobligation process; Offices, Boards and Divisions’ status of obligations controls and preparation, review, and approval of journal entries; and Assets Forfeiture Fund and Seized Asset Deposit Fund’s obligations and disbursements controls and seized and forfeited property controls.
While the Department’s financial statement audit results have continued to improve, the Department still lacks sufficient automated systems to readily support ongoing accounting operations and financial statement preparation. Inadequate, outdated, and in some cases non-integrated financial management systems do not provide certain automated financial transaction processing activities that are necessary to support management’s need for timely and accurate financial information throughout the year. Many tasks still must be performed manually at interim periods and at year’s end, requiring extensive manual efforts on the part of financial and audit personnel. These significant, costly, and time-intensive manual efforts will continue to be necessary for the Department and its components to produce financial statements until automated, integrated processes and systems are implemented that readily produce the necessary information throughout the year. While the Department is moving towards implementing a Unified Financial Management System that it believes will correct many of these issues, implementation has been slow and will not be completed across the Department for at least another 5 years.
The FY 2007 consolidated report on compliance and other matters identified no instances of significant non-compliance with applicable laws and regulations. Although some instances of non-compliance were reported at some of the components, the consolidated report determined that none of the component level non-compliance issues caused the Department as a whole to be in significant non-compliance.
| Comparison of FY 2007 and FY 2006 Audit Results | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Reporting Entity | Auditors’ Opinion On Financial Statements | Number of Material Weaknesses1 | Number of Significant Deficiencies2 | |||||||
| Financial | Information Systems | Financial | Information Systems | |||||||
| 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |
| Consolidated Department of Justice | U3 | U | 0 | 0 | 0 | 1 | 1 | 1 | 1 | 0 |
| Offices, Boards and Divisions | U | U | 0 | 0 | 0 | 0 | 2 | 0 | 1 | 1 |
| Assets Forfeiture Fund and Seized Asset Deposit Fund | U | U | 0 | 0 | 0 | 0 | 2 | 1 | 1 | 1 |
| Federal Bureau of Investigation | U | U | 0 | 0 | 1 | 1 | 0 | 0 | 0 | 0 |
| Drug Enforcement Administration | U | U | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 0 |
| Office of Justice Programs | U | U | 0 | 1 | 0 | 1 | 2 | 1 | 1 | 0 |
| U.S. Marshals Service | U | U | 2 | 1 | 0 | 1 | 0 | 0 | 1 | 0 |
| Federal Bureau of Prisons | U | U | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 1 |
| Federal Prisons Industries | U | U | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 0 |
| Working Capital Fund4 | N/A | U | N/A | 0 | N/A | 0 | N/A | 1 | N/A | 1 |
| Bureau of Alcohol, Tobacco, Firearms and Explosives | U | U | 1 | 1 | 0 | 1 | 0 | 0 | 1 | 0 |
| Component Totals | 3 | 3 | 1 | 4 | 6 | 3 | 8 | 4 | ||
A material weakness is a significant deficiency (see below) or combination of significant deficiencies that result in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Department’s internal control.
A significant deficiency is a control deficiency or combination of control deficiencies that adversely affects the Department’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with U.S. generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Department’s consolidated financial statements that is more than inconsequential will not be prevented or detected by the Department’s internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions to prevent or detect and correct misstatements on a timely basis.
An unqualified opinion is an auditor’s report that states the financial statements present fairly, in all material respects, the financial position and results of operations of the reporting entity, in conformity with generally accepted accounting principles.
Beginning in FY 2007, the activities and balances of the Working Capital Fund, previously reported separately, have been included in the financial statements of the Offices, Boards and Divisions.
Investigations
The following is an example of a case involving more than one component that the OIG’s Investigations Division handled during this reporting period:
A multi-agency investigation that included the OIG’s Fraud Detection Office led to the arrest of two civilian brothers on charges of conspiracy and trafficking of counterfeit goods. The indictment returned in the Southern District of Texas alleged that the brothers intentionally trafficked counterfeit computer networking cards into the United States. The computer cards were shipped from China and used by customers that included the FBI, BOP, U.S. Marine Corps, U.S. Air Force, Federal Aviation Administration, Department of Energy, and multiple defense contractors, universities, school districts, and financial institutions. Judicial proceedings continue.
Ongoing Work
The Removal of U.S. Attorneys and Hiring for Career Positions
The OIG and the Department’s Office of Professional Responsibility are conducting a joint review of the Department’s removal of several U.S. attorneys. The joint review also is investigating allegations that Department personnel used political considerations in assessing candidates for career Department positions. In addition, the joint review is examining whether Department employees improperly considered applicants’ political affiliations when hiring for the Department’s entry-level Honors Program and Summer Law Intern Program from 2002 through 2006.
Review of the Department’s Involvement with the Terrorist Surveillance Program
The OIG is reviewing the Department’s involvement with the National Security Agency program known as the “terrorist surveillance program” or “warrantless surveillance program.” This review is examining the Department’s controls over and use of information related to the program and the Department’s compliance with legal requirements governing the program.
Assessment of Major IT Vulnerabilities
The Department’s operations have become increasingly dependent on IT systems and the information contained within those systems. This OIG audit is identifying the Department’s major IT vulnerabilities and assessing actions taken to mitigate them. The audit also is determining the extent to which the Department has communicated the Office of Management and Budget’s IT security requirements to its components.
Sex Offender Registration
The OIG is reviewing the Department’s efforts to implement the Sex Offender Registration and Notification Act (Title I of the Adam Walsh Child Safety and Protection Act of 2006). We are reviewing how the Department is identifying, investigating, arresting, and prosecuting fugitive sex offenders who failed to register or update their registrations. We also are determining the status of the Department’s efforts to create and maintain national sex offender registries and provide guidance and assistance to states regarding the maintenance of their sex offender registries.
Prison Staff Sexual Abuse of Inmates
The OIG is reviewing the Department’s efforts to prevent sexual abuse of federal inmates and detainees by BOP and USMS staff. Our review is examining whether the Department is implementing adequate policies and procedures for addressing sexual abuse issues, investigating allegations of abuse, and prosecuting substantiated cases.
Review of Legislative and Public Affairs Expenses
In response to a directive in the 2008 Consolidated Appropriations Act, the OIG is conducting an audit of legislative and public affairs expenses within the Department, including expenses of the legislative and public affairs offices of Department components.