text: b' United States Department of State\n and the Broadcasting Board of Governors\n\n Office of Inspector General\nOffice of Inspector General\n\n Semiannual Report to the Congress\n\n April 1. 2006 to September 30, 2006\n\x0c Summary of OIG Accomplishments\n\n\nFinancial Results:\nQuestioned costs\n Issued during the reporting period $ 795,000\n Management decision during the reporting period $ 13,000\nRecommendations for funds to be put to better use\n Issued during the reporting period $15,602,000\n Management decision during the reporting period $ -0-\n\nInvestigative recoveries $ 443,670\n\nInvestigative Results:\nCases opened ................................................................................................ 15\nCases closed .................................................................................................. 12\nJudicial actions ............................................................................................... 16\nAdministrative actions .................................................................................... 11\nHotline and complaint activity ......................................................................... 275\n\n\n\nReports Issued: 50\n\n\n Picture on the front cover: Embassy Santiago, Chile\n\n\n\n Requests for additional copies of this\n publication should be addressed to:\n\n Of\xef\xac\x81ce of Inspector General\n U.S. Department of State\n OIG/EX, Room 810\n 1700 North Moore Street\n Arlington, VA 22209\n\n\n\n Department of State Publication 11371\n Of\xef\xac\x81ce of Inspector General\n\x0c TABLE OF CONTENTS\n\n\n\n\nEXECUTIVE SUMMARY ....................................................................................... 1\nCONGRESSIONAL ACTIVITIES AND OUTREACH ............................................ 9\n\n DEPARTMENT OF STATE\n\nAUDITS .............................................................................................................. 13\nINSPECTIONS ................................................................................................... 29\nINFORMATION TECHNOLOGY......................................................................... 45\nINVESTIGATIONS............................................................................................... 47\nAPPENDIX 1: DEPARTMENT OF STATE INVESTIGATIVE ACTIVITIES.......... 53\nAPPENDIX 2: REPORTS ISSUED..................................................................... 55\nAPPENDIX 3: SAVINGS AND MORE EFFECTIVE USE OF RESOURCES ..... 59\n Table 1: Questioned Costs\n Table 2: Funds To Be Put To Better Use\nAPPENDIX 4: RESOLUTION OF REPORTS AND RECOMMENDATIONS ....... 61\n\n\n\n BROADCASTING BOARD OF GOVERNORS\n\n\nAUDITS .............................................................................................................. .69\nINFORMATION TECHNOLOGY.......................................................................... 73\nINSPECTIONS .................................................................................................... 75\nINVESTIGATIONS............................................................................................... 77\nAPPENDIX 1: BROADCASTING BOARD OF GOVERNORS INVESTIGATIVE\n ACTIVITES ................................................................................................... .79\nAPPENDIX 2: REPORTS ISSUED...................................................................... 81\nAPPENDIX 3: SAVINGS AND MORE EFFECTIVE USE OF RESOURCES ...... 83\n Table 1: Questioned Costs\n Table 2: Funds To Be Put To Better Use\n\n\n\nLIST OF ABBREVIATIONS ................................................................................. 85\n\x0c EXECUTIVE SUMMARY\n\n\nThe auditors, inspectors, investigators, and other professionals in the Of\xef\xac\x81ce of In-\nspector General (OIG) promote effective management, accountability, and positive\nchange in the Department of State (Department), the Broadcasting Board of Gover-\nnors (BBG), and the foreign affairs community. They provide leadership to:\n\n\xe2\x80\xa2 promote integrity, ef\xef\xac\x81ciency, effectiveness and economy;\n\n\xe2\x80\xa2 prevent and detect waste, fraud, abuse and mismanagement;\n\n\xe2\x80\xa2 identify vulnerabilities and recommend constructive solutions;\n\n\xe2\x80\xa2 offer expert assistance to improve Department and BBG operations;\n\n\xe2\x80\xa2 communicate timely, useful information that facilitates decision-making and\n achieves measurable gains; and\n\n\xe2\x80\xa2 keep the Department, BBG and the Congress fully and currently informed.\n\nThis report summarizes work carried out by OIG during the period April 1 through\nSeptember 30, 2006, which included the issuance of 50 reports of audits, inspec-\ntions, and other reviews with recommendations to improve Department and BBG\nprograms and operations. A full list of reports issued by OIG during this period can\nbe found in Appendix 2.\n\n\n\nIraq Oversight\n\nSupplemental funding of $1.7 million has enabled OIG to provide oversight of\nDepartment activities in Iraq and Afghanistan in FY 2006. During this reporting\nperiod, OIG performed a survey of anticorruption programs in Iraq. The survey\ndrew on OIG\xe2\x80\x99s previous inspection report, issued last period, of Embassy Baghdad\xe2\x80\x99s\nrule-of-law programs and, in particular, that report\xe2\x80\x99s key judgment that \xe2\x80\x9cBasic to\nthe success of all U.S. hopes for democracy and good governance in Iraq is an ef-\nfective anti-corruption regime.\xe2\x80\x9d Conducted in collaboration with a team from the\nSpecial Inspector General for Iraq Reconstruction (SIGIR), which issued a parallel\naudit report, the OIG survey included an inventory of U.S. government funding for\nanticorruption programs in Iraq and an analysis of the work done by the Embassy\xe2\x80\x99s\n13-member anticorruption working group. The survey found that the interagency\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006 to September 30, 2006 1\n\x0cprocess for promoting public integrity in Iraq is working reasonably well, but given\nthe general recognition that corruption in Iraq is widespread and with less than $65\nmillion in U.S. funding for this purpose, a greater U.S. effort with more interagency\ncooperation and greater international support were needed. The survey also found\nthat the institutional framework for Iraqi anticorruption activities is in place, with a\nBoard of Supreme Audit, a Commission on Public Integrity, and Inspectors General\nfor each ministry, but it is fragile, and improved collaboration among the three insti-\ntutions and the Iraqi courts is a priority.\n\nA joint OIG survey with SIGIR identi\xef\xac\x81ed funding received and expended by the\nBureau of International Narcotics and Law Enforcement Affairs (INL) that was\nearmarked for Iraq-related activities and evaluated INL accounting procedures for\nthose funds. Of nearly $1.5 billion available to INL for activities in Iraq, the bureau\nhad obligated about $1.312 billion, or about 88 percent, as of December 31, 2005.\nINL was able to track Iraqi-related funds received and allotted to major programs\nand procurement actions, and \xef\xac\x81nancial information forwarded to the Department\xe2\x80\x99s\nBureau of Resource Management was generally accurate. However, some funding\nrecipients, primarily the Department of Justice and its independent agencies, did not\nadequately provide \xef\xac\x81nancial information on the status of the expenditure of funds\nreceived from INL through memoranda of agreement. In response to the report\xe2\x80\x99s\nrecommendations, INL has initiated or proposed solutions that will strengthen \xef\xac\x81nan-\ncial accountability and internal controls, including enhanced liaison between INL and\nthe Justice Department to foster better, more timely \xef\xac\x81nancial reporting by the Justice\nDepartment for activities in Iraq that are funded through INL.\n\n\n\nProtection of People and Facilities\n\nOne of the most pressing challenges for the Department and BBG continues to\nbe providing for the protection of people, information, and facilities. Over this\nperiod, OIG issued seven classi\xef\xac\x81ed security annexes in conjunction with manage-\nment reviews of embassies and constituent posts in Panama, El Salvador, Costa Rica,\nLatvia, Chile, Hungary, and Argentina. The details of the annexes are discussed in\na classi\xef\xac\x81ed annex to this report. OIG also issued a summary report of personal\nsecurity awareness at 14 missions inspected during FY 2006 and noted some success\nin addressing compound security upgrades at existing facilities, although physical and\ntechnical security vulnerabilities still accounted for almost half of OIG recommen-\ndations issued during the period, including the need to upgrade access control points\nat mission compounds.\n\n\n\n 2 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cOIG\xe2\x80\x99s audit of domestic emergency preparedness at BBG\xe2\x80\x99s Washington Metropoli-\ntan facilities found that, although BBG had implemented an Occupant Emergency\nProgram, the guidance was outdated and did not fully comply with federal regula-\ntions.\n\n\n\nFinancial Management\n\nDuring this reporting period, OIG issued 15 audit reports addressing issues related\nto \xef\xac\x81nancial statements, contracts and grants, airline travel, purchase card programs,\ntravel advances, and other \xef\xac\x81nancial management concerns. OIG\xe2\x80\x99s audit of the\nDepartment\xe2\x80\x99s reporting of aircraft and aircraft parts determined that the Depart-\nment had underreported the cost and number of its aircraft and aircraft parts, and\nthat the Department\xe2\x80\x99s FY 2004 \xef\xac\x81nancial statements had underreported the value of\naircraft and aircraft parts by $162 million. As a result, the Department has initiated\na review of its aviation program\xe2\x80\x99s structure and responsibilities, with a view toward\nmore centralized management.\n\nAn audit of the Department\xe2\x80\x99s identi\xef\xac\x81cation and collection of value-added taxes\n(VAT) overseas found that the Department did not have an adequate process to\nidentify and collect VAT reimbursements, and that problems in obtaining necessary\ndocumentation related to a construction contract could affect the Department\xe2\x80\x99s abil-\nity to collect an estimated $5.9 million in VAT reimbursements. OIG recommended\nthat the Department implement standard policies for submitting requests for reim-\nbursement from host governments, aggressively pursue tax relief agreements before\nundertaking construction projects, and review ongoing construction projects to\nidentify opportunities for collecting additional VAT reimbursements.\n\nA review of International Cooperative Administrative Support Services (ICASS)\nprograms at 38 overseas posts inspected between October 2004 and April 2006\nfound that the Department has done a good job of consolidating ICASS into a\nsingle administrative platform on new embassy construction projects, but additional\nsteps are needed in combining ICASS services for those missions that are not sched-\nuled for new construction. The \xef\xac\x81rst inspection conducted since the establishment of\nthe Global Financial Services Center (GFS-C) found that the effort to consolidate\nDepartment \xef\xac\x81nancial functions and responsibilities in Charleston, South Carolina,\nhas succeeded and that GFS-C provides excellent service and support to Depart-\nment bureaus and overseas posts. However, management controls in most of the\nGFS-C operational areas need improvement, and coordination between GFS-C and\nthe Bureau of Administration\xe2\x80\x99s Of\xef\xac\x81ce of Acquisition must be strengthened to im-\nprove contract oversight.\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 3\n\x0cQuality-of-Life Reviews\n\nDuring this reporting period, OIG conducted inspections of a group of of\xef\xac\x81ces\nvital to quality-of-life issues for Department employees and their families serving\naround the world, and found all to be well-run of\xef\xac\x81ces making important contribu-\ntions to quality of life, but made recommendations for some improvements. The\nFamily Liaison Of\xef\xac\x81ce, which helps family members address problems commonly\nencountered in living and working overseas, needed to set its priorities carefully to\naddress the challenging tension between its traditional advocacy role and the organi-\nzational expectation that it show measurable successes on family employment issues.\nThe Of\xef\xac\x81ce of Overseas Schools effectively manages the educational programs of\nthe Department and executes its $9.2-million school grants program in accordance\nwith regulations but needed to more clearly articulate its goals and objectives and\ncreate a strategic plan. The Of\xef\xac\x81ce of Medical Services does a commendable job of\nsafeguarding the physical and mental health of of\xef\xac\x81cial Americans and their families\nat U.S. missions abroad and of Department\xe2\x80\x99s domestic workforce, but could real-\nize savings by outsourcing speci\xef\xac\x81c, discrete functions such as laboratory services\nand implementing a fee-for-service program that would pass the cost of outpatient\ncare to an employee\xe2\x80\x99s insurance company. The Of\xef\xac\x81ce of Commissary and Recre-\nation Staff delivers timely, high-quality services to approximately 130 commissary\nand recreation associations worldwide, but the $3.3-million Central Commissary and\nRecreation Fund needed better oversight from its board of directors, including a\nreview of expenditures since 2000. The Of\xef\xac\x81ce of Casualty Assistance\xe2\x80\x99s centralization\nof support to Department employees has systematized assistance and improved the\nquality of service to the families of victims.\n\n\n\nInformation Security\n\nThe Department and BBG continue to make progress on strengthening information\nsecurity programs and practices and recognize that more must be done to effectively\nadminister and manage information security programs. The Federal Information\nSecurity Management Act (FISMA) requires OIG to review and evaluate develop-\nment, documentation, and implementation of comprehensive plans to protect the\ncon\xef\xac\x81dentiality, integrity, and availability of mission-critical information and systems.\nOIG\xe2\x80\x99s evaluation identi\xef\xac\x81ed a number of issues, including documentation related to\nmissionwide security programs\xe2\x80\x99 planning and management, system and policy access\ncontrols, and inadequate separation of key information technology (IT) duties.\n\n 4 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cDuring its FY 2006 FISMA reviews and information security inspections, OIG iden-\nti\xef\xac\x81ed several areas that must be addressed by the Department\xe2\x80\x99s Chief Information\nOf\xef\xac\x81cer, including formalizing the Department\xe2\x80\x99s Information Systems Security Of\xef\xac\x81-\ncer (ISSO) initiative to include performance assessment and training of those per-\nforming ISSO duties; developing and implementing a system security program plan\nto administer information security Departmentwide; ensuring complete inventories\nof IT assets and contractor systems and verifying security levels assigned to IT appli-\ncations and systems; identifying the total number of employees requiring IT security\nawareness training; addressing fragmentation in the Department\xe2\x80\x99s certi\xef\xac\x81cation and\naccreditation process; and including IT security \xef\xac\x81ndings identi\xef\xac\x81ed by outside sources\nin the Plan of Action and Milestones process.\n\nAreas of improvement since OIG\xe2\x80\x99s FY 2005 FISMA review included internal and\nexternal reporting of computer security incidents, and signi\xef\xac\x81cant progress in ad-\ndressing privacy requirements.\n\n\n\nLaw Enforcement\n\nA joint investigation with the U.S. Agency for International Development (USAID)\nOIG determined that an FSN cashier serving at an embassy in Africa embezzled\nmore than $200,000 from USAID and the Department. The cashier pleaded guilty\nto embezzlement and was sentenced to 30 months\xe2\x80\x99 imprisonment and restitution of\n$214,000. As part of OIG\xe2\x80\x99s Passport Sentinel initiative, OIG investigated three sepa-\nrate instances of private citizens in California who fraudulently obtained valid U.S.\npassports for false identities established using the names and Social Security numbers\nof deceased infants.\n\n\n\nInspector General Activities\n\nInspector General Howard J. Krongard and Deputy Inspector General William E.\nTodd traveled to Iraq and Jordan during September to meet with all leaders of the\nIraqi anticorruption mechanism, including all 29 Iraqi Inspectors General whom IG\nKrongard addressed, the heads of the Board of Supreme Audit (BSA) and the Com-\nmission on Public Integrity, and the Prime Minister\xe2\x80\x99s Chief of Staff. Recommenda-\ntions made by IG Krongard, including the appointment of U.S. advisors to the Iraqi\nIGs and to the BSA, have been adopted by Embassy Baghdad.\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 5\n\x0c The IG and his deputy also met with\n many senior Embassy Baghdad person-\n nel and Department of Defense and\n USAID leaders, reviewed the construc-\n tion of the new embassy compound in\n Baghdad and the facilities for construc-\n tion workers, and visited provincial\n reconstruction teams in Baghdad and\n Babil Province and the Provincial Coun-\n cil Chairman, Deputy Governor, Chief\n of Police, and Chief Justice of Babil\n Province. They also met with SIGIR\n personnel to begin the transition process\n IG Howard Krongard and Deputy IG Bill Todd mandated by the recent Defense Autho-\n on the helopad in Baghdad rization Act.\n\nIn Jordan, the IG and Deputy IG met with members of the Jordan International\nPolice Training Center in both Amman and at the Center to discuss the future of the\ntraining center. At Embassy Amman, the Inspector General met with senior em-\nbassy personnel and, as is his practice at all posts he visits, with entry-level of\xef\xac\x81cers\n(ELOs), who praised their leadership but were looking for even more opportuni-\nties to do public outreach in the host country. As a result of the IG\xe2\x80\x99s followup, the\nELOs are being offered more opportunities to perform public outreach activities as\npart of their assigned work.\n\nIn his role as Chair of the Board of External Auditors of the Organization of\nAmerican States (OAS), the Inspector General presented the Board\xe2\x80\x99s 2005 Report to\nthe OAS Permanent Council, detailed the activities of the Board, highlighted certain\ninternal control and programmatic weaknesses that had been identi\xef\xac\x81ed by the Board,\nand made recommendations to the Permanent Council on how these issues could be\naddressed. At the request of the Secretary General of the OAS, Mr. Krongard also\nattended the OAS General Assembly session in the Dominican Republic to provide\nadvice and consultation regarding budgeting, \xef\xac\x81nancial, and managerial matters.\n\nThe Inspector General and OIG staff met with various international visitors, includ-\ning the Comptroller General of Panama, the Inspector General of the Ministry of\nForeign Affairs of Canada, the Commissioner of Iraq\xe2\x80\x99s Commission on Public\nIntegrity, and leaders of the Ministry of Personnel of the People\xe2\x80\x99s Republic of\nChina, to discuss oversight and transparency in government operations. The\nInspector General and Assistant Inspectors General from each of\xef\xac\x81ce briefed the\nUnited Nations Under-Secretary-General for Internal Oversight Services and her\nchief of staff on OIG structure, staf\xef\xac\x81ng, and working and reporting relationships.\n\n\n 6 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cThe IG participated on various Department committees, spoke before various\ngroups including a presentation to the annual Foreign Service nationals (FSN)\nworldwide conference, and hosted quarterly meetings of the Intelligence Community\nInspectors General Forum and the Inspection and Evaluation Committee of the\nPresident\xe2\x80\x99s Council on Integrity and Ef\xef\xac\x81ciency.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 7\n\x0c8 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c CONGRESSIONAL ACTIVITIES AND OUTREACH\n\n\n\nCongressional Mandates and Requests\n\nIn response to legislative mandates and requests from Congress, OIG conducted the\nfollowing reviews during this semiannual period.\n\n\xe2\x80\xa2 As mandated by the Federal Information Security Management Act of 2002,\n OIG conducted independent assessments of the Department\xe2\x80\x99s and BBG\xe2\x80\x99s\n information security systems by reviewing the overall effectiveness of each\n agency\xe2\x80\x99s information security programs. (IT-I-06-03 and IT-I-06-04)\n\xe2\x80\xa2 In response to a request by the U.S. Senate, Committee on Foreign Relations,\n OIG reported on the U.S. Speaker & Specialist Program Review, Bureau of Interna-\n tional Information Programs. (ISP-C-06-52)\n\n\xe2\x80\xa2 Following a request from a U.S. Senator for assistance with regard to alleged\n wrongdoing by a foreign company, and by U.S. of\xef\xac\x81cials in permitting fees to\n be paid to such company, representatives of OIG met with staff members\n of the relevant Senate committee and provided information.\n\n\xe2\x80\xa2 As mandated by the Chief Financial Of\xef\xac\x81cers (CFO) Act, as amended, OIG\n directed and monitored the following \xef\xac\x81nancial statement audits and other work\n conducted by an independent public accountant:\n\n \xe2\x80\xa2 Audit of the Foreign Service Retirement and Disability Fund\xe2\x80\x99s 2005, 2004, and 2003\n Financial Statements (AUD/FM-06-37)\n\n \xe2\x80\xa2 Audit of the International Boundary and Water Commission\xe2\x80\x99s 2005 and\n 2004 Financial Statements (AUD/FM-06-33)\n\n \xe2\x80\xa2 Management Letter Related to the Audit of the International Boundary and Water\n Commission\xe2\x80\x99s 2005 and 2004 Principal Financial Statements (AUD/FM-06-32)\n\n \xe2\x80\xa2 Application of Agreed-Upon Procedures for Retirement, Health Bene\xef\xac\x81ts, and Life\n Insurance Withholdings and Contributions (AUD/FM-06-40)\n\n The Inspector General and/or OIG staff also met on a number of occasions\nwith congressional staff members of GAO to review and comments on a variety\nof projects and issues.\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 9\n\x0cLegislation Monitored\n\nBills reviewed and monitored by OIG legislative staff during this period included the\nfollowing:\n\n\xe2\x80\xa2 S. 2285: A bill to amend the Inspector General Act by setting a 7-year term\n limit for Inspectors General and to allow Inspectors General to submit their\n budget requests directly to Congress.\n\n\xe2\x80\xa2 S. 1803 and H.R. 2475: Fiscal Year 2006 Intelligence Authorization Act.\n\n\xe2\x80\xa2 H. R. 4436: A bill to provide certain authorities for the Department of State, and\n for other purposes.\n\n\xe2\x80\xa2 H. R. 4939: A bill to make emergency supplemental appropriations for the\n \xef\xac\x81scal year ending September 30, 2006, and for other purposes.\n\n\xe2\x80\xa2 H. R. 4603: A bill to amend the Public Health Service Act with respect to\n pandemic in\xef\xac\x82uenza, and for other purposes.\n\n\n\nImplementation of the Government\nPerformance and Results Act and the\nPresident\xe2\x80\x99s Management Agenda\n\nFor each mission and bureau inspected, OIG reviews mission and bureau perfor-\nmance plans and rightsizing issues. For example, OIG found that given the demands\nof global repositioning, the consulate general in Hamilton, Bermuda, should be\nrestructured and its staff reduced. A two-of\xef\xac\x81cer post would be suf\xef\xac\x81cient to manage\nU.S. interests and provide a lessened but adequate level of consular services. In terms\nof performance measurement, neither the Of\xef\xac\x81ce of Allowances, nor any other of\xef\xac\x81ce\nin the Department, measures the effectiveness of Department of State Standard-\nized Regulations incentive allowances and differentials. As a result, the effectiveness\nof the Department\xe2\x80\x99s $80.9 million in expenditures to attract and retain personnel\nat overseas hardship and danger pay posts cannot be demonstrated. The Of\xef\xac\x81ce of\nInspector General recommended that the Department establish a working group to\nestablish performance measures for Department of State Standardized Regulations\nincentive allowances and differentials.\n\n\n 10 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c Department Outreach Activities\n\n As part of continuing efforts to promote accountability through better\n awareness of OIG\xe2\x80\x99s role, mission, and services, OIG made presentations\n to four ambassadorial seminars and two Foreign Service of\xef\xac\x81cer orienta-\n tions, as well as \xef\xac\x81nancial management, general services of\xef\xac\x81cer, and other\n courses offered by the Foreign Service Institute. With the support of the\n Department, OIG investigators have undertaken a proactive initiative\n to strengthen \xef\xac\x81nancial accountability by providing fraud prevention and\n awareness training to Department personnel responsible for \xef\xac\x81nancial sys-\n tems, contracts and grants, and procurement. The OIG fraud prevention\n and awareness program is presented to relevant bureau personnel and\n to all General Services Of\xef\xac\x81cer courses at the Foreign Service Institute.\n Senior staff also met with Ambassadors and Deputy Chiefs of Mission\n preparing to depart for new assignments to discuss areas of emphasis in\n their missions and provide suggestions to assist in the management of\n their missions.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 11\n\x0c12 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cDEPARTMENT OF STATE\n\x0c October 31, 2006\n\n\nMEMORANDUM\n\nTO: The Secretary\n\nFROM: OIG \xe2\x80\x93 Howard J. Krongard\n\nSUBJECT: Semiannual Report to Congress, April 1 to September 30, 2006\n\nI am pleased to transmit to you the Of\xef\xac\x81ce of Inspector General\xe2\x80\x99s (OIG)\nSemiannual Report to the Congress for the period ending September 30. This\nreport is required by the Inspector General Act of 1978, as amended, and covers\nthe work of this of\xef\xac\x81ce during the period indicated. The Act requires that you\ntransmit the report to the appropriate committees of the Congress by November\n30, together with any comments you may wish to make.\n\nA major focus of my work, and that of my staff, during this reporting period\nhas been oversight of Department activities in Iraq, particularly support for\nanticorruption initiatives, accountability for Iraq-related funding, and preparation\nwith the Special Inspector General for Iraq Reconstruction for the transition\nprocess mandated by the recent Defense Authorization Act. This is work that\nwould not have been possible without the $1.7 million in supplemental funding\nprovided by Congress.\n\nOther OIG activities during the reporting period focused on key issues affecting\nthe programs and operations of the Department and BBG, including protection\nof people and facilities, \xef\xac\x81nancial management, quality of life, and information\nsecurity. These activities and our achievements are summarized in this report,\nalong with the required statistical data.\n\x0c16 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c AUDITS\n\n\n\n\nSurvey of the Status of Funding for Iraq\nPrograms Allocated to the Department of\nState\xe2\x80\x99s Bureau of International Narcotics and\nLaw Enforcement Affairs as of December 31,\n2005 (AUD/IQO-06-30)\n\nThis report presented the results of the joint survey by OIG and SIGIR of funding\nfor Iraqi-related activities by INL. The primary objectives were to identify funding\nreceived and expended by INL from October 1, 2002, through December 31, 2005,\nthat was earmarked for Iraq and to evaluate INL accounting procedures for those\nfunds.\n\nAccording to the Department\xe2\x80\x99s Bureau of Resource Management (RM), as of\nDecember 31, 2005, the Department received over $1.3 billion from two Iraq\nRelief and Reconstruction Fund (IRRF) emergency supplemental appropriations\nthat provided program funding speci\xef\xac\x81cally supporting Iraqi-related activities. Of that\namount, INL received about $957.5 million, or 74 percent. In addition, the Depart-\nment of Defense provided about $532.2 million to assist programs managed by INL.\nAs of December 31, 2005, INL had obligated about $1,312.2 million, or about 88\npercent of the funding received, and expended about $1 billion.\n\nINL was able to track funds received and allotted to major programs and pro-\ncurement actions. Overall, INL accounted for Iraqi-related funds obligated and\nmonitored expenses and liquidations. Although extracting information from INL\xe2\x80\x99s\naccounting system on funds for Iraq was cumbersome, the \xef\xac\x81nancial information for-\nwarded to RM was generally accurate. The OIG team recommended that INL better\ndocument accounting adjustments and make electronic backups of its supplementary\naccounting records.\n\nSome funding recipients, however, did not adequately provide \xef\xac\x81nancial informa-\ntion on the status of their expenditure of funds received from INL. According to\nan INL of\xef\xac\x81cial, this situation has continued despite INL\xe2\x80\x99s efforts to correct it. The\nOIG team recommended that INL modify the memoranda of agreement so that\nrecipients\xe2\x80\x99 \xef\xac\x81nancial reports would better inform INL of the actual \xef\xac\x81nancial status of\na program.\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 17\n\x0cINL has initiated or proposed solutions that will strengthen \xef\xac\x81nancial accountability\nand internal controls, particularly to foster better, more timely \xef\xac\x81nancial reporting by\nother funding recipients for activities in Iraq that are funded through INL.\n\n\n\nCONTRACTS AND GRANTS\n\nApplication of Agreed-Upon Procedures\non Kellogg, Brown & Root Services, Inc.\xe2\x80\x99s,\nRevised Termination Settlement Proposal\n(AUD/CG-06-25)\n\nIn response to a request from the Department\xe2\x80\x99s Bureau of Administration, Of\xef\xac\x81ce of\nLogistics Management, Of\xef\xac\x81ce of Acquisitions Management (A/LM/AQM), OIG\ncontracted with an independent public accounting \xef\xac\x81rm to perform certain agreed-\nupon procedures on Kellogg, Brown & Root Services, Inc.\xe2\x80\x99s (KBR) March 17, 2005,\nrevised termination settlement proposal under Contract No. S-FBOAD-99-D-0016,\nTask Order 57. The attestation sought to determine whether KBR\xe2\x80\x99s revised proposal\nconformed to the requirements of a standard proposal.\n\nThe independent accountant found that the KBR revised termination settlement\nproposal included claims for unsupported and inappropriate costs concerning\nservices provided by its subcontractor, Morrison International Construction, Inc.\n(Morrison). Speci\xef\xac\x81cally, in its termination settlement proposal of February 24, 2005,\nMorrison included $53,173 for selected management personnel costs. The amounts\npresented were estimates unsupported by any documentation. In addition, Morrison\nincluded $527,753 in its proposal, which it identi\xef\xac\x81ed as unabsorbed overhead on the\ndirect cost of terminated work. The law is well settled that post-termination unab-\nsorbed overhead is not recoverable in a termination claim.\n\nAlthough the total questioned amount associated with the management personnel\nand unabsorbed overhead costs was $580,926, after adjustments for overhead, G&A,\nand fee, the full amount of the questioned costs totaled $795,034. The independent\naccountant recommended that A/LM/AQM disallow the full amount.\n\n\n\n\n 18 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cApplication of Agreed-Upon Procedures on\nChoctaw Archiving Enterprise\xe2\x80\x99s Proposed\nDirect Labor and Indirect Labor Rates and\nAccounting System (AUD/CG-06-26)\n\nIn response to a request from A/LM/AQM, OIG contracted with an independent\npublic accounting \xef\xac\x81rm to perform agreed-upon procedures on direct labor hour\nand indirect expense rates proposed by Choctaw Archiving Enterprise (Choctaw)\non November 23, 2005. The independent accountant also reviewed Choctaw\xe2\x80\x99s\naccounting system to determine whether it was adequate to account for federal funds\nunder the proposed contract.\n\nIn general, the independent accountant found that Choctaw\xe2\x80\x99s proposed direct labor\nand indirect costs were excessive. Also, its review of Choctaw\xe2\x80\x99s proposal had been\nprepared on a \xef\xac\x81xed-rate per-hour basis, a type of contract that does not require an\naccounting system that differentiates between direct and indirect costs. (Billings\nare based on time as presented on signed and approved timesheets.) Accordingly,\nChoctaw\xe2\x80\x99s accounting system was considered to be minimally adequate for purposes\nof the contemplated contract. The independent accountant recommended that\nA/LM/AQM use the recomputed rates included in its report and that the Depart-\nment contracting of\xef\xac\x81cer\xe2\x80\x99s representative periodically review Choctaw\xe2\x80\x99s invoiced labor\ncharges based on supporting timesheets and other relevant documents. In summary,\nthe independent accountant recommended costs that were $1,985,783 less than the\ncosts proposed by the contractor for the base and four option years.\n\n\n\nAgreed-Upon Procedures on American\nCouncils for International Education\n(AUD/CG-06-28)\n\nIn response to a request from the Department\xe2\x80\x99s Bureau of Educational and Cultural\nAffairs (ECA), OIG contracted with an independent accounting \xef\xac\x81rm to perform\nagreed-upon procedures on the \xef\xac\x81nancial management and reporting systems and the\n\xef\xac\x81nancial condition of the American Councils for International Education (ACIE) to\nassist ECA in its review of ACIE.\n\nThe independent accountant found that ACIE\xe2\x80\x99s accounting system identi\xef\xac\x81ed the\nsource and application of funds for Federal awards and compared expenditures with\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 19\n\x0cbudgeted amounts for each award in accordance with Of\xef\xac\x81ce of Management and\nBudget Circular A-110 requirements. The independent accountant also found that\nACIE\xe2\x80\x99s accounting records supported its Financial Status Reports and reimburse-\nment requests.\n\nRegarding ACIE\xe2\x80\x99s \xef\xac\x81nancial condition, the independent accountant found that assets\nand revenues exceeded liabilities and expenses, respectively, in 2005 and 2004, and its\nratio of current assets to current liabilities was signi\xef\xac\x81cantly lower than ratios at other\nsimilar organizations. ACIE has, however, managed cash \xef\xac\x82ow through the use of its\nlines of credit on its available balances of $1.8 million.\n\n\n\nAgreed-Upon Procedures on Direct Labor\nand Indirect Expense Rates Proposed by\nSkidmore, Owings & Merrill (AUD/CG-06-29)\n\nIn response to a request from the Department\xe2\x80\x99s Bureau of Overseas Buildings\nOperations (OBO), OIG contracted with an independent accounting \xef\xac\x81rm to per-\nform agreed-upon procedures on direct labor and indirect expense rates proposed by\nSkidmore, Owings & Merrill under a proposed contract to perform building design\nservices for a new consulate complex in Guangzhou, China.\n\nThe independent accountant found that the documentation provided by Skidmore,\nOwings & Merrill in support of its cost proposal was insuf\xef\xac\x81cient to justify its pro-\nposed rates. The independent accountant computed new rates and recommended\nthat OBO use its recommended rates for pricing to be performed under the contem-\nplated contract.\n\n\n\nAgreed-Upon Procedures on Direct Labor\nand Indirect Expense Rates Proposed by\nIntegrated Communications Solutions, Inc.\n(AUD/CG-06-34)\n\nIn response to a request from A/LM/AQM, OIG contracted with an independent\naccounting \xef\xac\x81rm to perform agreed-upon procedures on direct labor and indirect\nexpense rates proposed by Integrated Communications Solutions, Inc. (ICS), under\na proposed contract to provide telecommunications services to the Department\xe2\x80\x99s\nDiplomatic Telecommunications Service Project Of\xef\xac\x81ce.\n\n\n 20 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cThe independent accountant found that the documentation provided by ICS in sup-\nport of its cost proposal was suf\xef\xac\x81cient to justify its proposed rates. Raytheon Com-\npany Intelligence and Information Systems (Raytheon) did not respond to requests\nfor documentation supporting its proposed rates. The independent accountant rec-\nommended that the rates proposed by ICS be used to price work under the contem-\nplated contract. The independent accountant also recommended that A/LM/AQM\nrequire Raytheon to provide a copy of its current Forward Pricing Rate Agreement\nwith the Department of Defense, in order to validate Raytheon\xe2\x80\x99s proposed rates.\n\n\n\nFINANCIAL MANAGEMENT\n\nApplication of Agreed-Upon Procedures\nfor Retirement, Health Bene\xef\xac\x81ts, and Life\nInsurance Withholdings and Contributions\n(AUD/FM-06-40)\n\nUnder OIG\xe2\x80\x99s direction, an independent external auditor performed the procedures\nenumerated in Of\xef\xac\x81ce of Management and Budget Bulletin No. 06-03, Audit Require-\nments for Federal Financial Statements. These procedures were performed solely to\nassist the Of\xef\xac\x81ce of Personnel Management (OPM) in assessing the reasonableness\nof the Retirement, Health Bene\xef\xac\x81ts, and Life Insurance withholdings and contribu-\ntions as well as semiannual headcount information submitted by the Department.\nThe contractor did not identify any material differences in the amount for withhold-\nings and contributions in the Department\xe2\x80\x99s payroll \xef\xac\x81le and the amount submitted to\nOPM. However, the contractor found that some employees\xe2\x80\x99 of\xef\xac\x81cial personnel \xef\xac\x81les\ndid not contain the required forms.\n\n\n\nNeed to Improve Internal Controls Related to\nTravel Advances (AUD/FM-06-39)\n\nOIG performed work to identify internal control de\xef\xac\x81ciencies related to the travel\nadvance process. OIG found that the Travel Manager (TM) application did not\nadequately restrict users\xe2\x80\x99 access and that the Department did not have an appropri-\nate process in place to authorize TM access or maintain a list of employees with high\nlevels of access. In addition, OIG identi\xef\xac\x81ed concerns with controls over ensuring\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 21\n\x0cthat cash and traveler\xe2\x80\x99s checks were provided only to authorized individuals within\nthe allowed timeframes. OIG also found that a monthly report of travel advances\nwas not forwarded to bureaus for review. In addition, the bureau at which OIG per-\nformed its work did not have a process to properly oversee travel advances.\n\nRM is reviewing outstanding travel advances in preparation for migrating data to the\nnew \xef\xac\x81nancial management system. However, OIG recommended that RM expand\nthis effort to implement the OIG recommendations.\n\n\n\nAudit of the Department\xe2\x80\x99s Identi\xef\xac\x81cation and\nCollection of Value-Added Taxes Overseas\n(AUD/FM-06-38)\n\nAs part of its responsibility to oversee Department management, OIG conducted\nan audit of value-added tax (VAT) issues at four posts overseas, speci\xef\xac\x81cally to\ndetermine whether the Department was properly identifying and collecting VAT\nreimbursements and accounting for VAT transactions. The OIG team found that\nthe Department did not have an adequate process to identify and collect VAT reim-\nbursements, nor did it have an adequate process to account for VAT. Posts were not\neffectively recording, tracking, and maintaining controls over VAT transaction data\nbecause of limitations with the overseas \xef\xac\x81nancial management system. Further, the\nDepartment had not effectively tracked and reported the amount of VAT that it had\nrequested but had not yet received from host governments. Also, the Department\ncould not determine the total amount of VAT reimbursements that were owed to it,\nand VAT receivables were not included on the Department\xe2\x80\x99s \xef\xac\x81nancial statements.\n\nOIG recommended that the Department implement standard policies for submitting\nrequests for reimbursement from host governments; aggressively pursue tax relief\nagreements before beginning construction projects; include revised contract clauses\nrelated to VAT in new construction contracts; and review ongoing construction proj-\nects to identify opportunities for collecting additional VAT reimbursements. OIG\nalso recommended that the Department implement a solution so that its \xef\xac\x81nancial\nmanagement system allows posts to record, track, and maintain control over VAT\ntransactions; issue standard policies on recording VAT receivables; and accurately\nreport VAT receivables on the Department\xe2\x80\x99s annual \xef\xac\x81nancial statements.\n\n\n\n\n22 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cAudit of the Foreign Service Retirement\nand Disability Fund\xe2\x80\x99s 2005, 2004, and 2003\nFinancial Statements (AUD/FM-06-37)\n\nUnder OIG\xe2\x80\x99s direction, an independent contractor audited the Foreign Service\nRetirement and Disability Fund\xe2\x80\x99s (FSRDF) \xef\xac\x81nancial statements as of the end of\nFY 2005, FY 2004, and FY 2003, to report on whether the statements presented\nfairly FSRDF\xe2\x80\x99s \xef\xac\x81nancial position and results of \xef\xac\x81nancial operations in accordance\nwith generally accepted accounting principles, whether FSRDF had an internal\ncontrol structure that provided reasonable assurance of achieving internal control\nobjectives, and whether FSRDF complied with applicable laws and regulations.\n\nThe independent external auditor issued an unquali\xef\xac\x81ed opinion on FSRDF \xef\xac\x81nancial\nstatements as of September 30, 2005, and did not identify any reportable conditions\nrelated to internal control or material instances of noncompliance.\n\n\n\nAudit of the International Boundary and\nWater Commission\xe2\x80\x99s 2005 and 2004 Financial\nStatements (AUD/FM-06-33)\n\nUnder OIG\xe2\x80\x99s direction, an independent external auditor audited the International\nBoundary and Water Commission (USIBWC), United States and Mexico, U.S. Sec-\ntion\xe2\x80\x99s (USIBWC) \xef\xac\x81nancial statements as of the end of FY 2005 and FY 2004, to\nreport on whether the statements presented fairly USIBWC\xe2\x80\x99s \xef\xac\x81nancial position and\nresults of \xef\xac\x81nancial operations in accordance with generally accepted accounting prin-\nciples, whether USIBWC had an internal control structure that provided reasonable\nassurance of achieving internal control objectives, and whether USIBWC complied\nwith applicable laws and regulations.\n\nThe independent external auditor issued an unquali\xef\xac\x81ed opinion on USIBWC\xe2\x80\x99s \xef\xac\x81nan-\ncial statements as of September 30, 2005, and did not identify any material weak-\nnesses or material instances of noncompliance.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 23\n\x0cManagement Letter Related to the Audit of\nthe U.S. Department of State 2005 and 2004\nPrincipal Financial Statements\n(AUD/FM-06-32)\n\nUnder generally accepted auditing standards, auditors performing \xef\xac\x81nancial statement\naudits are encouraged to report, in a separate management letter, internal control\nweaknesses that do not rise to the level necessary to be reported in the \xef\xac\x81nancial\nstatement opinion. During the above audit, the independent external auditor identi-\n\xef\xac\x81ed internal control weaknesses relating to USIBWC\xe2\x80\x99s internal evaluations, property\nand equipment, personnel issues, information security, suspense accounts, deferred\nmaintenance, accounts receivable, contract accruals, and \xef\xac\x81nancial reporting. The\nauditor recommended that USIBWC take appropriate action to address these weak-\nnesses.\n\n\n\nAssessment of Airline Travel (AUD/FM-06-23)\n\nAs part of an effort to maintain adequate internal controls over OIG operations and\nsupport Department efforts to improve controls over travel, OIG assessed its airline\ntravel policies and practices to determine whether it had effective controls and to\nidentify areas for potential cost savings. OIG identi\xef\xac\x81ed areas where OIG\xe2\x80\x99s controls\nshould be improved and began taking appropriate actions to correct the identi\xef\xac\x81ed\nweaknesses.\n\nOIG determined that performing a similar assessment would be bene\xef\xac\x81cial for other\nbureaus and of\xef\xac\x81ces, and therefore, to assist them, it provided the Department with\nthe assessment plan it used. The plan focused on premium-class travel requirements\nand controls over unused airline tickets and included steps to obtain information\non the type and cost of airline travel, which would be useful for monitoring travel\ntrends and making budgeting decisions. OIG emphasized that periodic assessments,\nusing the assessment plan or a similar tool, should be an integral component of the\nDepartment\xe2\x80\x99s controls over and oversight of airline travel.\n\n\n\n\n 24 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cINTERNATIONAL PROGRAMS\n\n\nAudit of the Department\xe2\x80\x99s Reporting of\nAircraft and Aircraft Parts (AUD/IP-06-35)\n\nAt INL\xe2\x80\x99s request, OIG began an audit at INL\xe2\x80\x99s Of\xef\xac\x81ce of Aviation at Patrick Air\nForce Base in Florida, where it learned that the Department might not have reported\nall aircraft and parts inventory on its annual \xef\xac\x81nancial statements. Because of the\nmagnitude of the potentially unreported assets and to assist the Department, OIG\nnarrowed its work to determine whether INL had appropriate controls to track and\nreport its aircraft and aircraft parts. Additionally, at the request of the certi\xef\xac\x81ed public\naccountants responsible for auditing the Department\xe2\x80\x99s \xef\xac\x81nancial statements, OIG\nconducted work in Colombia to determine the accuracy of the Department\xe2\x80\x99s report-\ning on aircraft and parts.\n\nOIG found that the Department underreported the cost, value, and number of its\naircraft and aircraft parts. In fact, the Department\xe2\x80\x99s FY 2004 \xef\xac\x81nancial statements\nunderreported by $162 million the cost of its aircraft and aircraft parts. Additionally,\nthe Department did not include all aircraft in its March 2005 report to the General\nServices Administration. The Department could not accurately report the number of\naircraft it owned because it had ineffective controls to track and report its air \xef\xac\x82eet.\nAs a result, government managers, Congress, and the public did not have accurate\nand complete information regarding the Department\xe2\x80\x99s air \xef\xac\x82eet.\n\nThe Department agreed with OIG\xe2\x80\x99s recommendations to improve the accountabil-\nity and reporting of aircraft and aircraft parts. As a result of OIG\xe2\x80\x99s work, INL has\ninitiated a review of its aviation programs, structure, and responsibilities with a view\ntoward more centralized management.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 25\n\x0c26 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c INSPECTIONS\n\n\nDuring this reporting period, the Of\xef\xac\x81ce of Inspections (ISP) published 11 reports\nof inspections of Department bureaus and of\xef\xac\x81ces and eight reports of overseas\nmissions. These reports focused on executive direction, program implementation,\nresource management, quality of life issues, and management controls. In addition,\nISP published a program survey, a program review, and two summary reports.\n\n\n\nIRAQ PROGRAM REVIEW\n\nSurvey of Anticorruption Programs, Embassy\nBaghdad, Iraq (ISP-IQO-06-50)\n\nOIG performed a survey of anticorruption programs in Iraq, that drew on OIG\xe2\x80\x99s\nprevious inspection report, issued last period, of Embassy Baghdad\xe2\x80\x99s rule-of-law\nprograms and, in particular, that report\xe2\x80\x99s key judgment that \xe2\x80\x9cBasic to the success of\nall U.S. hopes for democracy and good governance in Iraq is an effective anticorrup-\ntion regime.\xe2\x80\x9d Conducted in collaboration with a team from SIGIR, which issued\na parallel audit report, the OIG survey included an inventory of U.S. government\nfunding for anticorruption programs in Iraq and an analysis of the work done by the\nEmbassy\xe2\x80\x99s 13-member anticorruption working group.\n\nEngaging Iraqis to design an anticorruption regime for the future was seen as es-\nsential for success but far from fully achieved. U.S. government and nongovernment\npersonnel working on anticorruption were committed to this important goal but\nrecognized it as a long-term effort.\n\nAs of August 2006, U.S. government funding directed speci\xef\xac\x81cally and solely toward\nanticorruption programs had been modest, amounting to under $65 million. De-\nspite the fact that attacking corruption was among the top U.S. priorities in Iraq, this\namount represented less than .003 percent of total IRRF funding. Non-U.S. donor\nfunding had been even less robust.\n\nThe OIG team found that a recently energized embassy anticorruption working\ngroup chaired by the embassy\xe2\x80\x99s economic counselor had agreed upon a comprehen-\nsive strategy for U.S. anticorruption assistance to Iraq. The interagency process for\npromoting public integrity was working reasonably well. However, given the general\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 27\n\x0crecognition that corruption in Iraq is widespread and the modest funding thus far,\na greater U.S. effort with more interagency cooperation and greater international\nsupport were needed. The chairman\xe2\x80\x99s request for increased staf\xef\xac\x81ng to deal with the\nanticorruption effort was also warranted and should be granted.\n\nThe survey also found that the institutional framework for Iraqi anticorruption activ-\nities was in place, with a Board of Supreme Audit, a Commission on Public Integrity,\nand Inspectors General for each ministry, but it was fragile. Judicial prosecutions\nof corruption cases had been few. Improved collaboration among the three institu-\ntions and between them and the Iraqi courts was a priority. Training for the staff of\nthese three principal institutions was ad hoc and uneven, and the establishment of a\ntraining facility serving the needs of these institutions a priority. Differences of view\non ownership, however, had divided both Iraqi principals and American consultants.\nIraqi and U.S. of\xef\xac\x81cials had to overcome their differences, whether actual or apparent,\nso that a training facility could soon be established.\n\n\n\nDOMESTIC BUREAUS\n\nInspection of Global Financial Services \xe2\x80\x93 Charleston\n(ISP-I-06-33)\n\nThe consolidation of the Department\xe2\x80\x99s \xef\xac\x81nancial functions and responsibilities in\nCharleston, SC, had succeeded. The Department\xe2\x80\x99s associated personnel reductions\nin Washington, DC, and Paris, France, occurred in accordance with all regulatory\nrequirements and addressed the concerns and needs of affected personnel. Overall,\nGlobal Financial Services-Charleston (GFS-C) provided excellent service and sup-\nport to Department bureaus and overseas posts.\n\nManagement controls in most of the GFS-C operational areas needed improvement.\nTo illustrate, the majority of individuals certifying payments domestically did not\nhave certifying of\xef\xac\x81cer authority; nonetheless, they certi\xef\xac\x81ed payments amounting to\nover $6 billion in FY 2005. In addition, the fund balance in the Department\xe2\x80\x99s Cen-\ntral Financial Management System with Treasury reconciliation showed an accumu-\nlated $256 million difference between the two.\n\nThe compensation plan for Department employees serving in Iraq was found to be\nvirtually unworkable and complicated. The system\xe2\x80\x99s rules were dif\xef\xac\x81cult to under-\nstand, and various categories of civilian personnel were affected differently.\n\n\n28 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cCoordination between GFS-C and A/LM/AQM must be strengthened. Contract\ndocumentation was not always available, and the designations of contracting of\xef\xac\x81cer\xe2\x80\x99s\nrepresentatives (COR) did not exist or were unavailable.\n\n Quality of Life Reviews\n\n OIG conducted several inspections of Department of\xef\xac\x81ces that are respon-\n sible for quality of life issues for Department employees and their families\n around the world. These of\xef\xac\x81ces provide services that can affect morale at\n post and a mission\xe2\x80\x99s ability to attract and retain staff. The Family Liai-\n son Of\xef\xac\x81ce (FLO), Of\xef\xac\x81ce of Medical Services, Of\xef\xac\x81ce of Overseas Schools\n (OPR/OS), Commissary and Recreation Staff, Of\xef\xac\x81ce of Allowances, and\n the Of\xef\xac\x81ce of Casualty Assistance were all well run of\xef\xac\x81ces making impor-\n tant contributions to quality of life issues, but the inspections resulted in\n recommendations for improvement. (See the individual summaries for\n each inspection in this report.)\n\n During the same period, OIG\xe2\x80\x99s overseas inspections re\xef\xac\x82ected the ef-\n fectiveness of the quality of life of\xef\xac\x81ces. The inspection reports for U.S.\n embassies in Budapest, Buenos Aires, Hamilton, Riga, San Jose, and\n Santiago characterized the community liaison of\xef\xac\x81ce (CLO) program as\n excellent. The quality of the CLO program was, in part, due to the support\n and training coordinators received from FLO. Embassy Santiago did not\n fund CLO training for its coordinators, and the OIG team informally recom-\n mended that the post fund such training.\n\n The CLO program is concerned with one of the most important issues\n to Foreign Service families: spousal employment. OIG\xe2\x80\x99s report on FLO\n made recommendations to improve the administration of spousal employ-\n ment initiatives. For example, this need was re\xef\xac\x82ected in OIG\xe2\x80\x99s inspection\n of Embassy Budapest, which was having dif\xef\xac\x81culty funding the program\n that provides employment and skills-building assistance to spouses. In\n Europe, hiring spouses was often less expensive than hiring local employ-\n ees.\n\n Overseas health units received high marks at the posts inspected. The\n regional medical and psychiatric of\xef\xac\x81cers made regular visits to the posts.\n Inspection reports of U.S. embassies in Panama and Buenos Aires made\n recommendations to evaluate the health care needed at those posts.\n\n The quality of overseas schools varied but was generally good. In Buda-\n pest, Buenos Aires, Riga, and Santiago, embassy employees rated the\n schools as excellent. In Hamilton, no schools had been deemed adequate\n by OPR/OS. The inspection team in Hamilton informally recommended\n that the regional educational of\xef\xac\x81cer visit the post to discuss this issue.\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 29\n\x0cInspection of the Family Liaison Of\xef\xac\x81ce (ISP-I-06-29)\n\nFLO makes an important contribution to the Department\xe2\x80\x99s goal of having a high-\nquality workforce by helping family members address problems commonly encoun-\ntered in working and living overseas. The of\xef\xac\x81ce was addressing a challenging tension\nbetween its traditional advocacy role and the organizational demand that it show\nmeasurable successes on family employment issues. The of\xef\xac\x81ce needed to set its\npriorities carefully to avoid diluting its programs through lack of personnel or budget\nresources.\n\nFLO served a signi\xef\xac\x81cant number of walk-in clients on sensitive personal matters,\nbut had inadequate space to perform all of its functions while respecting the con\xef\xac\x81-\ndentiality of its clients. The solution to this issue involved displacing a small of\xef\xac\x81ce\ncontiguous to FLO and expanding into that space. The Bureaus of Administration\nand Human Resources must cooperate in relocating the adjacent of\xef\xac\x81ce as soon as\npossible.\n\nFor the past three years, FLO had requested funding for a pilot phase-equalization\nprogram to assist posts in hiring eligible family members for jobs that would normal-\nly go to foreign nationals. Department management should evaluate this initiative in\nlight of its overall priorities and either fund a pilot project or remove this program\nfrom the agenda.\n\n\n\nInspection of the Bureau of Administration,\nOf\xef\xac\x81ce of Overseas Schools (ISP-I-06-36)\n\nThe Bureau of Administration\xe2\x80\x99s Of\xef\xac\x81ce of Overseas Schools (A/OS) was found to\neffectively manage the educational programs of the Department. The of\xef\xac\x81ce had a\nstaff of exceptionally quali\xef\xac\x81ed, caring, and dedicated education professionals who\nwere committed to the well-being of students. The of\xef\xac\x81ce executed its $9.2 million\nschool grants program in accordance with regulations but could do a better job by\nmore clearly articulating its goals and objectives and creating a strategic plan.\n\nThe Department successfully absorbed a large increase in grant funds from appropri-\nations to upgrade security at overseas schools (the Soft Targets Program). However,\nthere were no consistent security standards applicable to schools, and the responsibil-\nities of the various of\xef\xac\x81ces involved in the security program in Washington were not\n\n30 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cclearly de\xef\xac\x81ned. The OIG team recommended that the Bureau of Administration\nestablish and fund a position to supplement existing security and public outreach\nprograms for overseas schools.\n\n\n\nInspection of the Of\xef\xac\x81ce of Medical Services\n(ISP-I-06-34)\n\nThe Of\xef\xac\x81ce of Medical Services (MED) commendably ful\xef\xac\x81lled its mission of safe-\nguarding the physical and mental health of of\xef\xac\x81cial Americans and their families at\nU.S. missions abroad and of the Department\xe2\x80\x99s domestic workforce. To systematize\nits operations and improve quality control, MED clari\xef\xac\x81ed who was entitled to its\nhealth services abroad, was arranging a formal agreement with the Peace Corps to\nprovide for cooperation in locations where it and the Department were both present,\nand was in the \xef\xac\x81nal phases of drafting a Quality Systems Manual based on the Inter-\nnational Standards Organization\xe2\x80\x99s (ISO) ISO 9001-2000 quality standards.\n\nMED had taken seriously its role of protecting against the threat of avian in\xef\xac\x82uenza\nand worked cooperatively with the Department\xe2\x80\x99s Senior Coordinator for Avian In\xef\xac\x82u-\nenza and with other relevant federal agencies, notably the Department of Defense.\n\nMED did not fully comply with certain administrative provisions of the Health\nInsurance Portability and Accountability Act of 1996 and the Privacy Act of 1974,\nwhich protect the security and con\xef\xac\x81dentiality of health information. Written poli-\ncies and procedures for the use and disclosure of protected health information were\nneeded, and all \xef\xac\x81les and notes on patients must be included in the patient\xe2\x80\x99s of\xef\xac\x81cial\nmedical records.\n\nThe President\xe2\x80\x99s Management Agenda requires federal agencies to explore ways\nto minimize costs while enhancing performance and service. MED could realize\nsavings by outsourcing speci\xef\xac\x81c, discrete functions such as laboratory services, oc-\ncupational health services, the examination clinic, and medical informatics. Another\npotentially signi\xef\xac\x81cant cost savings would arise from implementing a fee-for-service\nprogram that would pass the cost of outpatient care to an employee\xe2\x80\x99s insurance com-\npany instead of the U.S. government.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 31\n\x0cInspection of the Bureau of Administration,\nOf\xef\xac\x81ce of Commissary and Recreation Staff\n(ISP-I-06-35)\n\nThe Of\xef\xac\x81ce of Commissary and Recreation Staff delivers timely, high-quality services\nto approximately 130 commissary and recreation associations worldwide. This small\nof\xef\xac\x81ce effectively performed its core functions, keeping associations \xef\xac\x81nancially viable\nand operating in compliance with Department regulations.\n\nThe Central Commissary and Recreation Fund, a $3.3 million fund established to\nsupport commissary operations overseas, needed better oversight from its board of\ndirectors. The OIG team recommended that the Bureau of Administration convene\nthe Central Commissary and Recreation Fund\xe2\x80\x99s board of directors and implement\nmeasures to manage the fund in accordance with the bylaws, including a review of\nexpenditures since 2000. The team also recommended that the Bureau of Adminis-\ntration develop a strategy to address the impending resource shortfall in the Central\nFund and include the strategy in its FY 2008 Bureau Performance Plan.\n\n\n\nInspection of the Of\xef\xac\x81ce of Casualty\nAssistance (ISP-I-06-28)\n\nThe Of\xef\xac\x81ce of Casualty Assistance (OCA) provided an excellent example of atten-\ntion to contingency planning. Its director since 1999 designed a model for the of\xef\xac\x81ce\nthat could address mass casualty situations while providing clients with personal\ncaseworker support. The small, select OCA staff oversaw several well-trained and\ncommitted crisis support teams, which served as a mechanism for enhancing the\nof\xef\xac\x81ce\xe2\x80\x99s capacity in times of crisis. OCA\xe2\x80\x99s centralization of support to Department\nemployees had systematized assistance and improved the quality of service to the\nfamilies of victims.\n\n\n\n\n 32 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c Memorandum Report, International Cooperative\n Administrative Support Services (ISP-I-06-38)\n\n Based on a review of the International Cooperative Administrative Support\n Services (ICASS) program at 38 posts between October 2004 and April\n 2006, the OIG team found that the Department had done a good job of\n consolidating ICASS services into a single administrative platform on all\n new embassy compound construction projects but had not been as suc-\n cessful in combining ICASS services for embassies that were not sched-\n uled for a new embassy compound. OIG inspection reports in FY 2005\n and FY 2006 consistently noted that agencies overseas continued to resist\n subscribing to the full range of administrative services offered by ICASS.\n The OIG team identi\xef\xac\x81ed duplicative administrative services at 29 of the 38\n inspected posts in FY 2005 and FY 2006.\n\n OIG noted examples of consolidation producing cost savings and made\n recommendations to address identi\xef\xac\x81ed issues. Cost savings had been\n achieved at the U.S. mission in France, Embassy Lilongwe, and at posts\n with new embassy compounds that will contain a single administrative\n platform. The OIG team recommended that the Department issue guid-\n ance that addresses problems associated with pooling assets of different\n agencies and issue a cable that identi\xef\xac\x81es guidance and site assistance\n available to missions, which will facilitate quicker responses to surge\n agencies\xe2\x80\x99 requests for operational support.\n\n\n\n\nInspection of the Bureau of Population,\nRefugees and Migration (ISP-I-06-40)\n\nThe Bureau of Population, Refugees, and Migration (PRM) managed the Depart-\nment\xe2\x80\x99s second largest program budget, with approximately $997 million expended\nin FY 2005. PRM was found to have a well-deserved reputation for professionalism\nand competent and effective management. Changes in the bureau\xe2\x80\x99s operational en-\nvironment, such as the decline in the number of refugees worldwide, had been more\nthan offset by increased numbers of internally displaced persons and other persons\nof concern. Meanwhile, the conceptual frameworks for the international humanitar-\nian system and U.S. foreign assistance programs were being substantially rede\xef\xac\x81ned,\neven as resources to support humanitarian activities were declining. These changes\nheld signi\xef\xac\x81cant implications for the bureau\xe2\x80\x99s mission and ways of doing business.\nThe OIG team found that addressing these challenges and opportunities successfully\nwill require vision, proactive leadership, an enhanced capacity for strategic planning,\nand more active public diplomacy and public affairs efforts.\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 33\n\x0cThe bureau received high marks for the effectiveness of its programs and the ef\xef\xac\x81-\nciency with which it managed its contributions, grants, and cooperative agreements.\nNevertheless, the bureau had correctly identi\xef\xac\x81ed a need to further strengthen its\ngrants management, performance measurement, and monitoring and evaluation\nfunctions. To adjust to its changing roles and responsibilities, the bureau must make\nmore ef\xef\xac\x81cient use of existing staff and consider some increases in administrative\nresources.\n\n\n\nInspection of the Of\xef\xac\x81ce of Civil Rights (ISP-I-06-41)\n\nThe Of\xef\xac\x81ce of Civil Rights (S/OCR) was ineffective in ensuring that Equal Employ-\nment Opportunity (EEO) and diversity concerns were properly integrated into the\nOf\xef\xac\x81ce of the Secretary\xe2\x80\x99s Bureau Performance Plan and the Department\xe2\x80\x99s strategic\nand performance planning process. This failure marginalized the effectiveness of\nS/OCR\xe2\x80\x99s programs at all levels. The OIG team recommended that S/OCR establish\na process to correct this.\n\nOne-third of all authorized S/OCR positions were vacant, which affected S/OCR\nmorale and contributed to its backlog of EEO complaints. The of\xef\xac\x81ce\xe2\x80\x99s new director\nhad initiated a review of all position descriptions and the entire of\xef\xac\x81ce structure, ini-\ntiatives that needed to be completed promptly. Because it must recruit new staff and\ntrain them in the Equal Employment Opportunity Commission processes, S/OCR\xe2\x80\x99s\nnew leadership had an unparalleled opportunity to evaluate the existing work\xef\xac\x82ow\nand rebuild the of\xef\xac\x81ce in line with current priorities.\n\nS/OCR\xe2\x80\x99s outreach unit focused an inordinate amount of its limited resources on\ncommemorative events, rather than devoting its attention to mandated programs\nfor Hispanic and disabled persons, women, and to the identi\xef\xac\x81cation and analysis of\nEEO barriers. The OIG team recommended a review and restructuring to make re-\nsources available for diversity and outreach activities that would yield greater measur-\nable results.\n\n\n\nReview of the Bureau of Diplomatic Security\xe2\x80\x99s\nRevocation Process for Security Clearances\n(ISP-I-06-43)\n\nThe Bureau of Diplomatic Security (DS) equitably administered the process for the\nrevocation of security clearances, known as the adverse action process. DS investi-\n\n 34 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cgators\xe2\x80\x99 and adjudicators\xe2\x80\x99 actions appeared free of bias or prejudice and were based\non speci\xef\xac\x81ed investigative and adjudicative guidelines and on Department standards.\nHowever, DS did not have a process to follow up on those cases that contained a\nconditional reinstatement of the security clearance.\n\nEmployees could appeal the proposed revocation of their security clearance to a\nthree-member appeals panel, but the appeals panel did not have a speci\xef\xac\x81ed time\nframe in which to meet, which could further delay the process. The introduction of\nnew information or the involvement of outside entities could also greatly affect the\ntime for completing an adverse action case. In the cases examined, the appeals panel\ntook from three to 13 months to render the Department\xe2\x80\x99s \xef\xac\x81nal decisions after DS\nhad transmitted the employees\xe2\x80\x99 appeals.\n\n Fraud Detection and Prevention\n\n In its ongoing compliance with recommendations made in OIG\xe2\x80\x99s Manage-\n ment (Review of Visa and Passport Fraud Prevention Programs) (ISP-CA-\n 05-52), the Bureau of Consular Affairs (CA) has signi\xef\xac\x81cantly increased the\n resources and attention devoted to fraud detection and prevention. CA\n reorganized its Of\xef\xac\x81ce of Fraud Prevention Programs into geographic units,\n strengthened the fraud prevention component of the Department\xe2\x80\x99s consul-\n ar training program, and improved intelligence sharing, data mining, and\n investigative cooperation with the Department of Homeland Security and\n other of\xef\xac\x81ces involved in border security.\n\n\n\n\nInspection of Bureau of Administration, Of\xef\xac\x81ce\nof Language Services (ISP-I-06-47)\n\nThe Of\xef\xac\x81ce of Language Services (LS) in the Bureau of Administration effectively\ndelivered timely, world-class interpreting and translating services to the President,\ncabinet-level of\xef\xac\x81cers, federal agencies, and the District of Columbia courts. The\nemployees and contractors in the of\xef\xac\x81ce ranked among the world\xe2\x80\x99s top interpreters\nand translators.\n\nThe most signi\xef\xac\x81cant challenge facing LS was recruiting a pool of direct-hire em-\nployees and contractors who are among the world\xe2\x80\x99s best interpreters and translators.\nHowever, the Of\xef\xac\x81ce of Personnel Management\xe2\x80\x99s applicant-rating procedures and\nstringent security clearance requirements have hindered the recruitment of direct-\nhire employees.\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 35\n\x0cInspection of the Bureau of Administration,\nOf\xef\xac\x81ce of Allowances (ISP-I-06-51)\n\nThe Of\xef\xac\x81ce of Allowances (ALS) is a well-functioning of\xef\xac\x81ce that coordinates poli-\ncies, regulations, standards, and procedures for overseas allowances and differential\npayments applicable to U.S. government civilian employees throughout the federal\ngovernment. ALS played a constructive role in the development of bene\xef\xac\x81ts pack-\nages for employees serving in Iraq and Afghanistan and quickly implemented statuto-\nrily authorized changes to allowance levels at these posts.\n\nNeither ALS, nor any other of\xef\xac\x81ce in the Department, measured the effectiveness of\nDepartment of State Standardized Regulations incentive allowances and differentials.\nAs a result, the effectiveness of the Department\xe2\x80\x99s $80.9 million in expenditures to\nattract and retain personnel at overseas hardship and danger pay posts could not be\ndemonstrated. The OIG team recommended that the Department establish a work-\ning group to establish performance measures for Department of State Standardized\nRegulations incentive allowances and differentials.\n\nInternal controls to monitor embassies and consulates that are delinquent in sub-\nmitting required allowances reports also needed improvement. Some posts had not\nsubmitted required danger pay, post hardship differential, and cost of living reports\nin many years. The OIG team recommended that the Bureau of Administration\nestablish and implement written standard operating procedures to address delinquent\nallowance reports submitted by overseas posts.\n\n\n Department Guidance on Staf\xef\xac\x81ng Surges\n\n In its memorandum report on ICASS (ISP-I-06-38), OIG found that agen-\n cies believed that ICASS was not \xef\xac\x82exible or responsive enough to provide\n adequate administrative services to agencies with surging workloads. The\n OIG team recommended that the Of\xef\xac\x81ce of Rightsizing the U.S. Govern-\n ment Overseas Presence provide guidance and information regarding\n the site assistance available to missions to facilitate quicker responses to\n surge agencies\xe2\x80\x99 requests for operational support. The Department issued\n the guidance in a cable sent to all diplomatic and consular posts on Sep-\n tember 12, 2006.\n\n\n\n\n 36 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cU.S. Speaker and Specialist Program Review\nBureau of International Information Programs\n(ISP-C-06-52)\n\nIn response to a Congressional request, OIG examined whether there was a \xe2\x80\x9clitmus\ntest\xe2\x80\x9d for speaker selection in the U.S. Speaker and Specialist Program. The OIG\nteam determined that no such test exists. In the past, there was undue attention to\nthe speaker selection process, which led to the Bureau of International Information\nPrograms (IIP) staff \xe2\x80\x99s self-censorship in the vetting and selection of speakers. How-\never, public diplomacy leadership in the Department emphasized a realistic balance\nin the selection of speakers. The Strategic Speakers Initiative was a new concept\nwith great potential, and should continue as a more focused stand-alone program to\nallow articulation on strategic policy issues.\n\nThere was a continuing need for the development of a speakers\xe2\x80\x99 evaluation matrix,\nwhich could provide the objective basis for program analysis and a management tool\nat all levels. Many individuals within IIP continued to view themselves as separate\nfrom the Department, which had an adverse impact on maximizing the U.S. Speaker\nand Specialist Program potential.\n\n\n\nOVERSEAS MISSIONS\n Personal Security Awareness Programs at Overseas\n Missions\n\n In a memorandum to the Assistant Secretary for Diplomatic Security,\n OIG summarized the results of a review of personal security awareness\n programs at 14 missions inspected during FY 2006. All 14 missions had\n viable personal security awareness programs that met 12 FAM require-\n ments, and some posts exceeded those requirements. All regional secu-\n rity of\xef\xac\x81cers (RSO) at the inspected posts had the support of the executive\n of\xef\xac\x81ce in enforcing security awareness. However, mission personnel\xe2\x80\x99s\n receptiveness to security awareness depended on the RSO\xe2\x80\x99s effort, inter-\n est, and type of approach. Responsibility for personal security awareness\n required positive reinforcement of the RSO-managed program. In general,\n the Department\xe2\x80\x99s personal security awareness program increased overall\n security at missions overseas.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 37\n\x0cInspection of Embassy Panama City, Panama\n(ISP-I-06-30A)\n\nOIG\xe2\x80\x99s inspection of Embassy Panama City found that the dispersion of mission\npersonnel among 11 buildings negatively affected mission cohesion. Mission leader-\nship was working actively to create a sense of community well before most elements\nof the mission relocate to a new embassy compound (NEC) in the summer of 2007.\n\nThe mission management team needed to ensure that the entire mission was con-\nducting the necessary strategic planning for the move to a new chancery in 2007.\nThis was an opportunity to consolidate administrative services among agencies and\nto conduct a rightsizing exercise.\n\nEmbassy Panama City\xe2\x80\x99s management operations had improved, but management\nneeded to implement remedial action in the areas of ICASS, human resources, and\nsome parts of the general services unit. The successful implementation of an ambi-\ntious mentoring program should staunch the attrition of talented entry-level of\xef\xac\x81cers\nin Panama over the last few years.\n\n\n\nInspection of Embassy San Salvador, El Salvador\n(ISP-I-06-31A)\n\nEmbassy San Salvador\xe2\x80\x99s Ambassador and deputy chief of mission (DCM) provided\nthe mission security program with excellent support and cooperation, and the secu-\nrity of\xef\xac\x81ce enjoyed a positive reputation among mission staff members. The local\nguard and personal security programs at this critical crime threat embassy were man-\naged effectively, ef\xef\xac\x81ciently, and in line with Department policies.\n\nEmbassy San Salvador was making a concerted effort to eliminate duplicative admin-\nistrative support systems and deserved credit for recognizing and proactively address-\ning this inef\xef\xac\x81ciency.\n\n\n\n\n38 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cInspection of Embassy San Jos\xc3\xa9, Costa Rica\n(ISP-I-06-32A)\n\nThe relatively new Ambassador and DCM were honing mission objectives through\nan improved Mission Performance Plan (MPP). Promoting Costa Rica\xe2\x80\x99s adoption of\nthe Central American Free Trade Agreement remained the main mission priority.\n\nThe growing number of resident and visiting Americans to Costa Rica had taxed the\nconsular section\xe2\x80\x99s ability to adequately address American citizen services. With the\nexpected increased staf\xef\xac\x81ng, and the completion of a current project to expand the\ncramped consular of\xef\xac\x81ces, the consular section should be well positioned to give qual-\nity service to all clients. The Ambassador and DCM provided the regional security\nof\xef\xac\x81ce with solid support. Residential security and increased awareness training were\nhelping to address the reality of rising crime rates in San Jos\xc3\xa9.\n\n\n Impact of Department of Homeland Security Expansion\n Overseas on Chief of Mission Authorities (ISP-I-06-26)\n\n The rapid expansion of international activities by constituent agencies of\n the Department of Homeland Security (DHS) occurred before the DHS\n central of\xef\xac\x81ce had consolidated its own authorities and staf\xef\xac\x81ng. Individual\n DHS subunits had sought to place their direct-hire staff at diplomatic mis-\n sions overseas without direct coordination by a central DHS international\n of\xef\xac\x81ce. This expansion of DHS assets at U.S. embassies created oversight\n and coordination dif\xef\xac\x81culties for U.S. Ambassadors.\n\n The Departments of State and Homeland Security have signed a series\n of memoranda of understanding and at least one memorandum of agree-\n ment in an effort to streamline procedures for the assignment of DHS staff\n to Foreign Service posts overseas. In light of the ongoing coordination\n issues arising in the \xef\xac\x81eld, however, a standing coordination mechanism\n was needed.\n\n There was also a need for the Department and DHS to issue further clari-\n \xef\xac\x81cations to chiefs of missions as to the respective roles of the DHS visa\n security of\xef\xac\x81cers, the consular fraud of\xef\xac\x81cers, and RSOs engaged in anti-\n fraud work in consular sections abroad.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 39\n\x0c Best Practice: Partnering for Security with the American\n Chamber of Commerce\n\n Issue: The RSO at Embassy Riga established the \xef\xac\x81rst Overseas\n Security Advisory Council in Latvia and the Baltic states. The\n RSO negotiated for the American Chamber of Commerce to serve\n as a base of support and successfully invited other members of\n the American community into the council.\n\n Response: The council had representatives from the international\n schools, the U.S. missionary community, and other nongovern-\n mental organizations in Latvia.\n\n Result: The embassy and the American community were better\n able to communicate and coordinate in enhancing the communi-\n ty\xe2\x80\x99s security.\n\n\n\n\nInspection of Embassy Riga, Latvia (ISP-I-06-39A)\n\nOverall, Embassy Riga\xe2\x80\x99s component elements had performed exceptionally. The\npolitical/economic section was the driving element in managing the bilateral rela-\ntionship under the Ambassador\xe2\x80\x99s direction. The consular section was well run and\nprovided good customer service. The management section received high marks for\nits support to the mission. Meanwhile, the troubled public affairs section was being\nrestructured to re\xef\xac\x82ect better the embassy\xe2\x80\x99s public diplomacy priorities.\n\nThe embassy faced major challenges, including Latvia\xe2\x80\x99s October 2006 national elec-\ntions and the need to support the November 2006 summit of the North Atlantic\nTreaty Organization, which was to be held in Riga. The embassy must soon identify\na site for a new embassy compound and \xef\xac\x81nd a new residence for the Ambassador.\n\nThe intolerance of certain segments of Latvia\xe2\x80\x99s population towards minorities had\nled to incidents directed against mission staff and family members. The embassy\nwas exemplary in handling this challenge.\n\n\n\n\n 40 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cInspection of Embassy Santiago, Chile (ISP-I-06-45A)\n\nEmbassy Santiago had met or exceeded the Department\xe2\x80\x99s policy advocacy goals of\ngreater Chilean leadership in support of democracy and free markets and continued\nChilean participation in United Nations\xe2\x80\x99 peacekeeping activities in Haiti and else-\nwhere. Implementation of the U.S.-Chile Free Trade Agreement had generated an\nincrease in bilateral trade of more than 80 percent.\n\nPublic diplomacy programming was strong and well rounded, but would have greater\nimpact if it were linked more closely to the mission\xe2\x80\x99s strategic priorities. Law en-\nforcement entities at post readily shared information on their respective programs\nbut greater coordination was warranted to maximize the impact of these programs.\nThe embassy facilitated high-value bilateral cooperation in science, technology, and\nthe environment. All major management systems were in place and functioning.\nHowever, there was poor delivery of many administrative support services.\n\n\n\nInspection of Embassy Budapest, Hungary\n(ISP-I-06-46A)\n\nEmbassy Budapest worked successfully to maintain close bilateral relations while ef-\nfectively pressing U.S. positions on a full range of issues. The post\xe2\x80\x99s various sections\nand agencies were well integrated into a coherent and well-led operation that had\nclear leadership.\n\nEmbassy operations were hampered because they were spread over four different\nbuildings. The government of Hungary had offered to exchange the Marine House\n(a historic property) for two buildings adjacent to the chancery and said it would\nrehabilitate those buildings to meet U.S. requirements. The OIG team recommended\nthat the Department expeditiously gather needed information and negotiate a pack-\nage for exchanging the properties with the government of Hungary.\n\n\n\nInspection of Consulate General Hamilton, Bermuda\n(ISP-I-06-48)\n\nConsulate General Hamilton had a successful public diplomacy program that was\nled by a consul general who had invigorated the bilateral governmental relationship\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 41\n\x0cand strengthened the positive image of the United States in Bermuda. Given the\ndemands of global repositioning, the consulate general should be restructured and\nits staff reduced. A two-of\xef\xac\x81cer post would be suf\xef\xac\x81cient to manage U.S. interests and\nprovide a lessened but adequate level of consular services. The Bureau of Western\nHemisphere Affairs should take over responsibility for Consulate General Hamilton\nfrom the Bureau of European and Eurasian Affairs.\n\n\n\nInspection of Embassy Buenos Aires, Argentina\n(ISP-I-06-49A)\n\nEmbassy Buenos Aires\xe2\x80\x99 front of\xef\xac\x81ce team had fostered excellent interagency coopera-\ntion and orchestrated impressive law enforcement and security cooperation with Ar-\ngentine authorities. The public affairs and public diplomacy programs supported all\nof the post\xe2\x80\x99s Mission Performance Plan goals, but to improve the Argentine public\xe2\x80\x99s\npredominately negative opinion about the United States, the embassy\xe2\x80\x99s public affairs\nsection needed more tools to allow it to concentrate on programming with the most\nimpact. The consular section was still working hard to rebuild its capacity follow-\ning Argentina\xe2\x80\x99s 2002 loss of the visa waiver program and the country\xe2\x80\x99s unexpectedly\nrobust economic resurgence.\n\nThe growing crime and illicit drug traf\xef\xac\x81cking in Argentina, combined with the re-\ngional political shifts that signal reduced cooperation by neighboring governments\nwith U.S. counternarcotics programs, had increased the need for bilateral cooperation\nwith Argentine law enforcement of\xef\xac\x81cials. INL should adjust its program\naccordingly.\n\nThe embassy organized the President\xe2\x80\x99s participation in the November 2005 Sum-\nmit of the Americas. The post\xe2\x80\x99s overall performance in support of this summit was\ngood, but some \xef\xac\x81nancial issues remained unresolved at the time of the inspection.\n\n\n\n\n 42 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c INFORMATION TECHNOLOGY\n\n\n\nProtecting critical information and information systems continues to receive signi\xef\xac\x81-\ncant congressional and executive management attention. The Federal Information\nSecurity Management Act (FISMA) requires the OIG to review and evaluate devel-\nopment, documentation, and implementation of comprehensive plans to protect the\ncon\xef\xac\x81dentiality, integrity, and availability of mission critical information and systems.\nFISMA provides a framework for ensuring the \xe2\x80\x9ceffectiveness of security controls\nover information resources and systems that support Federal operations and assets.\xe2\x80\x9d\n\nAs part of the annual FISMA requirement, OIG evaluated information management\nand information security operations at the Department, BBG, and the Department\xe2\x80\x99s\nintelligence community constituency. A number of issues were identi\xef\xac\x81ed, including\ndocumentation related to mission-wide security program planning and management,\nsystem and policy access controls, inadequate separation of key information technol-\nogy (IT) duties, change control management for hardware and software deployment,\nand IT service continuity planning documentation. OIG teams also identi\xef\xac\x81ed miss-\ning or inadequate systems documentation including standard operating procedures,\nsecurity plans, and contingency plans. Further, they identi\xef\xac\x81ed inconsistent IT train-\ning, inadequate resources, and lack of centralized operations for end-user support.\n\nEarlier during this semiannual reporting period, the OIG Of\xef\xac\x81ce of Information\nTechnology worked with ISP as part of a larger multidisciplinary OIG team inspect-\ning PRM, the Of\xef\xac\x81ce of Medical Services, and BBG\xe2\x80\x99s Of\xef\xac\x81ce of Engineering and\nTechnology (BBG/E), and Of\xef\xac\x81ce of Program Review. Overseas posts it inspected\nincluded U.S. embassies in Buenos Aires, Santiago, Warsaw, Budapest, and Riga. In\nresponse to these inspections, the Department is correcting de\xef\xac\x81ciencies noted re-\ngarding system security controls, IT training, standardization and regionalization of\nIT support services, certi\xef\xac\x81cation and accreditation, patch management, and informa-\ntion systems security of\xef\xac\x81cer (ISSO) program.\n\n\n\nReview of the Information Security Program\nat the Department of State (IT-I-06-03)\n\nOIG\xe2\x80\x99s 2006 FISMA review determined that the Department had made progress in\nits internal and external reporting of computer security incidents, and made signi\xef\xac\x81-\ncant progress in addressing privacy requirements. However, there were several areas\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 43\n\x0cthat still remain to be addressed by senior management, issues also reported in OIG\xe2\x80\x99s\n2004 and 2005 FISMA reviews.\n\nThe Department had not taken adequate steps to verify that appropriate security\nlevels are being assigned to IT applications and systems. System owners had been\ngiven the responsibility to determine security level determinations for their respective\nsystems and applications. However, there was no assurance that appropriate classi-\n\xef\xac\x81cation of applications and systems was being done, and the Department needed to\naddress issues pertaining to its ISSO program.\n\nFurther, the Department still needed to identify the total number of Department\nemployees required to take IT security awareness training, and there were concerns\nwith the different approaches being used to the certi\xef\xac\x81cation and accreditation (C&A)\nprocess. In addition to bureaus performing their own certi\xef\xac\x81cation and accredita-\ntion on their respective systems, program of\xef\xac\x81cials were sharing dual responsibility\nfor applications and systems, resulting in potential duplication of effort. Finally, the\nDepartment needed to ensure that IT security \xef\xac\x81ndings identi\xef\xac\x81ed by all other sources\nwere addressed through the Plan of Action and Milestones (POA&M) process.\n\n\n\nSummary of FY 2005 Information Systems\nSecurity Issues (IT-I-06-01)\n\nInformation systems security continues to receive signi\xef\xac\x81cant congressional and ex-\necutive management attention. Although the Department installs advanced informa-\ntion systems to support its business processes and requirements, information security\nefforts to stay abreast of those advances in technology must improve.\n\nDuring FY 2005 inspections of 34 posts and bureaus, OIG gained valuable insight\ninto the Department\xe2\x80\x99s ongoing information systems security effort. The inspections\nuncovered systems security issues that crossed regional and bureau boundaries, al-\nlowing OIG to suggest several areas for improvement Department-wide. This report\nhighlighted new issues and those from previous inspections identi\xef\xac\x81ed as not being\nresolved during the last round of OIG inspections, and detailed \xef\xac\x81ndings of systemic\ninformation security weaknesses in the ISSO program, patch management proce-\ndures, con\xef\xac\x81guration management plans, and planning documentation.\n\nThe ISSO program continued to fall below the expectations of its role in the \xe2\x80\x9cde-\nfense-in-depth\xe2\x80\x9d strategy, and more needed to be done to ensure a consistent and\neffective ISSO program at every mission. Nearly half of the inspections conducted\nby OIG reported shortcomings in the ISSO program, including inattention to user\n\n 44 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0clibraries, mailboxes for classi\xef\xac\x81ed material being stored on the unclassi\xef\xac\x81ed systems,\ninadequate separation of duties among IT staff, missing or inadequate essential\nsystems security documentation and con\xef\xac\x81guration settings that deviate from Depart-\nment standards.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 45\n\x0c46 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c INVESTIGATIONS\n\n\n\n\nPROCUREMENT FRAUD\nOIG\xe2\x80\x99s Of\xef\xac\x81ce of Investigations (INV), with the assistance of the Of\xef\xac\x81ce of Audits,\nconducted an investigation of a Department vendor who double-billed the Depart-\nment for the purchase of blank compact discs over a two-year period. The investiga-\ntion determined that the vendor billed for approximately 130,000 compact discs that\nit never delivered to the Department. The charges were placed on the government\npurchase credit card of a Department employee who had retired without the card\nbeing deactivated.\n\nOn September 6, 2006, the owner of the company that supplied the compact discs\nto the Department pleaded guilty to embezzlement in U.S. District Court and was\nsentenced to eight months imprisonment, two months home detention, three years\nsupervised release, $100 special assessment and $103,951.86 of restitution payments\nthat begin three months after he completes his prison sentence.\n\n\n\nPASSPORT FRAUD\nAs part of its ongoing Passport Sentinel initiative, OIG opened an investigation of\na private citizen in California who fraudulently obtained a valid U.S. passport. A\njoint investigation with DS determined that the subject obtained the passport using\na false identity established under the name and social security number of a deceased\ninfant. The subject was arrested, and on April 10, 2006, pleaded guilty to one count\nof making false statements on a passport application, and sentencing of the subject\nis currently pending.\n\nAlso as part of the Passport Sentinel initiative, OIG conducted two other separate\ninvestigations of private citizens in California who also fraudulently obtained valid\nU.S. passports using false identities established under the names and social security\nnumbers of deceased infants. Joint investigations on the cases were conducted with\nDS and the DHS Bureau of Immigration and Customs Enforcement. The subjects\nwere arrested on April 18, 2006, and May 9, 2006, respectively, and their prosecution\nis pending.\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 47\n\x0cFALSE CLAIMS\n\nOIG conducted a joint investigation with DS involving a former embassy Foreign\nService National (FSN) employee who traveled to the United States for training in\n2002 on a Distinguished International Visitor (J-1) visa. The FSN never showed up\nfor his training program, and instead requested political asylum by claiming that he\nwas being persecuted in his home country.\n\nThe former FSN employee owed the Department for funds he received for his of-\n\xef\xac\x81cial travel to the United States. The subject reached an agreement with the civil\ndivision of the U.S. Attorney\xe2\x80\x99s Of\xef\xac\x81ce for the District of Columbia to repay $6,443 in\nfunds provided by the Department for his travel.\n\n\nOIG conducted an investigation of a Foreign Service of\xef\xac\x81cer who submitted an\nimproper claim for Separate Maintenance Allowance (SMA) payments. The of\xef\xac\x81cer\nwas ineligible for SMA because his spouse was also a Foreign Service of\xef\xac\x81cer. The\ninvestigation determined that the of\xef\xac\x81cer made the SMA claim after receiving errone-\nous advice from a management of\xef\xac\x81cer at his post. As a result of the investigation,\non July 17, 2006, the Bureau of Resource Management has informed OIG that the\nof\xef\xac\x81cer had entered into an agreement to repay the $7,478.25 in SMA payments he\nreceived.\n\n\n\nFOLLOW-UP ACTIONS\n\nEMBEZZLEMENT\n\nOIG conducted a joint investigation with DS concerning multiple allegations of\nwrongdoing by three DS agents. The issues investigated included allegations that the\nDS agents converted an estimated $20,000 in government property for their per-\nsonal use and also misused government vehicles. The investigation determined that,\nwhile serving at a U.S. embassy overseas, the agents made unauthorized purchases of\nelectronic equipment, clothing, weapons, and ammunition for their personal use. DS\ninvestigated additional professional misconduct allegations against the three agents.\n\n\n\n\n48 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cThe Bureau of Human Resources (HR) recommended that one of the agents be\nterminated, (action subsequently reduced to a 90-day suspension). On February 23,\n2006, HR recommended that a second agent be terminated from employment. On\nMarch 23, 2006, HR proposed that the third agent be suspended for 45 days. (OIG\nwas not advised by HR of the \xef\xac\x81nal disposition of this case until after the end of the previous semi-\nannual reporting period). (See OIG Semiannual Report, October 1, 2004, to March 31,\n2005, pp 51-52)\n\n\nA joint investigation with USAID\xe2\x80\x99s, Of\xef\xac\x81ce of Inspector General, determined that\nan FSN cashier serving at an embassy in Africa embezzled more than $200,000 from\nUSAID and the Department. The investigation revealed that the cashier embezzled\napproximately $120,000 from the USAID mission during a ten-year period ending\nin 2003. Subsequently, the subject was employed by the embassy and embezzled ap-\nproximately another $93,000 before the thefts were uncovered in early 2005. When\ninterviewed by agents of both agencies, the subject confessed to both embezzle-\nments and was subsequently indicted by a Federal Grand Jury in Charleston, South\nCarolina.\n\nOn December 29, 2005, the former cashier pleaded guilty to embezzlement. On\nMay 23, 2006, the subject was sentenced to 30 months imprisonment and restitution\nto the government in the amount of $214,000. (See OIG Semiannual Report,\nOctober 1, 2005, to March 31, 2006, p 47)\n\n\nOIG investigated two Department timekeepers who conspired to fraudulently claim\novertime by forging their supervisors\xe2\x80\x99 signatures on time and attendance certi\xef\xac\x81ca-\ntions and by entering false information into the Department\xe2\x80\x99s computerized time and\nattendance system. Over several years, the two timekeepers submitted approximately\n$100,000 in fraudulent overtime claims. On January 4, 2006, HR proposed that one\nof the timekeepers be terminated. The other timekeeper resigned shortly afterward.\n\nAfter their cases were referred to the U.S. Attorney\xe2\x80\x99s Of\xef\xac\x81ce, Eastern District of\nVirginia, one of the timekeepers pleaded guilty to the scheme. On May 12, 2006,\nshe was sentenced in U.S. District Court to \xef\xac\x81ve months con\xef\xac\x81nement, two years of\nsupervised release, and restitution of $96,000. Prosecution of the other timekeeper\nis still pending. (See OIG Semiannual Report, October 1, 2005, to March 31, 2006,\np 47)\n\n\nOIG opened an investigation into allegations that a Department employee was sleep-\ning on the job during work hours. The investigation determined that the employee\nwas working full time as a contract employee for the Department during the day\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 49\n\x0cand full time as a regular Department employee at night. The investigation deter-\nmined that the employee was absent without leave from his regular Department\nduties for a total of 502 hours from January 2002 until May 2003. OIG referred the\nmatter to HR for adjudication. OIG also issued a Management Assistance Report to\nthe Department\xe2\x80\x99s Of\xef\xac\x81ce of Legal Adviser suggesting that the Department\xe2\x80\x99s ethical\nguidelines should be changed so that full-time Department employees cannot simul-\ntaneously be employed as Department contract employees.\n\nOn July 13, 2005, HR proposed that the employee be terminated from his Depart-\nment of State employment. On April 12, 2006, HR issued its \xef\xac\x81nal disposition,\nreducing the proposed termination of the employee to a 60-day suspension and\nassessing the employee a total of $13,292.40 in restitution for salary paid during his\nabsences. (See OIG Semiannual Report, April 1, 2005, to September 30, 2005,\np 58)\n\n\nOIG opened an investigation into allegations that a DS agent submitted a false claim\nfor SMA payments. The investigation determined that the agent received $4,570 in\nSMA payments, despite having been legally separated from his spouse prior to his\napplication for the SMA. On February 16, 2005, HR proposed a \xef\xac\x81ve-day suspension\nof the agent for improperly receiving SMA bene\xef\xac\x81ts. On June 16, 2006, the Bu-\nreau of Resource Management informed OIG that it had initiated collection action\nagainst the employee in the amount of $4570. (See OIG Semiannual Report,\nOctober 1, 2004, to March 31, 2005, p 51)\n\n\n\nTypes of Cases*\n All Other, 8%\n\n\n\n\n Conflict of Interest, 12%\n Passport & Visa Fraud,\n 32%\n\n\n\n\n Contract & Procurement\n Fraud, 15%\n\n\n\n\n Employee Misconduct,\n 5%\n Embezzlement & Theft,\n 17%\n\n False Statements &\n Claims, 12%\n\n\n\n * = May not equal 100% due to rounding.\n\n\n50 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cHotline\n Held for action within OIG 31\n Referral to other of\xef\xac\x81ces for action 151\n No action necessary 93\n Total Hotline contacts received 275\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 51\n\x0c52 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cAPPENDIX 1: DEPARTMENT OF STATE INVESTIGATIVE ACTIVITIES\n\n\n\n\n Criminal Investigative Activities\n\n Indictments/Information 3\n Convictions 1\n Sentencings 3\n - Jail 35 Months\n - Probation 60 Months\n Referrals for Prosecution 6\n Referrals for Prosecution Declined 3\n Criminal Judgments/Restitutions $414,271.55\n\n Civil Investigative Activities\n\n Civil Referrals 0\n Civil Declinations 0\n Civil Recoveries $4,094.20\n\n Administrative Investigative Activities\n\n Administrative Referrals 5\n Personnel Actions\n - Removals 1\n - Suspensions 2\n - Reprimands/Admonishments 0\n - Reimbursements 3\n Administrative Recoveries $ 25,305.06\n\n Total Investigative Recoveries (Judicial and Administrative) $443,670.81\n\n Investigative Workload\n\n Cases Pending (3/31/06) 56\n New Cases Opened 14\n Cases Closed 10\n Cases Pending (9/30/06) 60\n Preliminary Inquiries Pending (3/31/06) 2\n Preliminary Inquiries Opened 9\n Preliminary Inquiries Closed 5\n Preliminary Inquiries Converted to Cases 1\n Preliminary Inquiries Pending (9/30/06) 5\n\n\n\n\n Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 53\n\x0c54 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c APPENDIX 2: REPORTS ISSUED\n\n\n AUDITS\n\nAUD/IQO-06-30 Survey of the Status of Funding for Iraq Programs\n Allocated to the Department of State\xe2\x80\x99s Bureau of\n International Narcotics and Law Enforcement Affairs as of\n December 31, 2005\n\nAUD/CG-06-25 Application of Agreed-Upon Procedures on Kellogg,\n Brown & Root Services, Inc.\xe2\x80\x99s, Revised Termination\n Settlement Proposal\n\nAUD/CG-06-26 Application of Agreed-Upon Procedures on Choctaw\n Archiving Enterprise\xe2\x80\x99s Proposed Direct and Indirect Labor\n Rates and Accounting System\n\nAUD/CG-06-28 Agreed-Upon Procedures American Councils for\n International Education\n\nAUD/CG-06-29 Agreed-Upon Procedures on Direct Labor and Indirect\n Expense Rates Proposed by Skidmore, Owings & Merrill\n\nAUD/CG-06-34 Agreed-Upon Procedures on Direct Labor and Indirect\n Expense Rates Proposed by Integrated Communications\n Solutions, Inc.\n\nAUD/FM-06-23 Assessment of Airline Travel\n\nAUD/FM-06-32 Management Letter Related to the Audit of the U.S.\n Department of State 2005 and 2004 Principal Financial\n Statements\n\nAUD/FM-06-33 Audit of the International Boundary and Water\n Commission\xe2\x80\x99s 2005 and 2004 Financial Statements\n\nAUD/FM-06-37 Audit of the Foreign Service Retirement and Disability\n Fund\xe2\x80\x99s 2005, 2004, and 2003 Financial Statements\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 55\n\x0c AUD/FM-06-38 Audit of the Department\xe2\x80\x99s Identi\xef\xac\x81cation and Collection of\n Value-Added Taxes Overseas\n\n AUD/FM-06-39 Need to Improve Internal Controls Related to Travel\n Advances\n\n AUD/FM-06-40 Application of Agreed-Upon Procedures for Retirement,\n Health Bene\xef\xac\x81ts, and Life Insurance Withholdings and\n Contributions\n\n AUD/IP-06-35 Audit of the Department\xe2\x80\x99s Reporting of Aircraft and\n Aircraft Parts\n\n INSPECTIONS\n\n ISP/IQO-06-50 Survey of Anticorruption Programs, Embassy Baghdad,\n Iraq\n\n ISP-I-06-26 Impact of Department of Homeland Security Expansion\n Overseas on Chief of Mission Authorities\n\n ISP-I-06-28 Inspection of the Of\xef\xac\x81ce of Casualty Assistance\n\n ISP-I-06-29 Inspection of the Family Liaison Of\xef\xac\x81ce\n\n ISP-I-06-33 Inspection of Global Financial Services \xe2\x80\x93 Charleston\n\n\n ISP-I-06-34 Inspection of the Of\xef\xac\x81ce of Medical Services\n\n ISP-I-06-35 Inspection of the Bureau of Administration, Of\xef\xac\x81ce of\n Commissary and Recreation Staff\n\n ISP-I-06-36 Inspection of the Bureau of Administration, Of\xef\xac\x81ce of\n Overseas Schools\n\n ISP-I-06-38 Memorandum Report, International Cooperative\n Administrative Support Services\n\n ISP-I-06-40 Inspection of the Bureau of Population, Refugees and\n Migration\n\n\n\n\n56 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cISP-I-06-41 Inspection of the Of\xef\xac\x81ce of Civil Rights\n\nISP-I-06-43 Review of the Bureau of Diplomatic Security\xe2\x80\x99s Revocation\n Process for Security Clearances\n\nISP-I-06-47 Inspection of the Bureau of Administration, Of\xef\xac\x81ce of\n Language Services\n\nISP-I-06-51 Inspection of the Bureau of Administration, Of\xef\xac\x81ce of\n Allowances\n\nISP-C-06-52 U.S. Speaker and Specialist Program Review Bureau of\n International Information Programs\n\nISP-I-06-30A Inspection of Embassy Panama City, Panama\n\nISP-I-06-31A Inspection of Embassy San Salvador, El Salvador\n\nISP-I-06-32A Inspection of Embassy San Jose, Costa Rica\n\nISP-I-06-39A Inspection of Embassy Riga, Latvia\n\nISP-I-06-45A Inspection of Embassy Santiago, Chile\n\nISP-I-06-46A Inspection of Embassy Budapest, Hungary\n\nISP-I-06-48 Inspection of Consulate General Hamilton, Bermuda\n\nISP-I-06-49A Inspection of Embassy Buenos Aires, Argentina\n\n INFORMATION TECHNOLOGY\n\nIT-I-06-01 Summary of FY 2005 Information Systems Security Issues\n\nIT-I-06-03 Annual FISMA Review of the Information Security\n Program at the Department of State\n\n SECURITY ANNEXES\n\n\n\nISP-S-06-30A Inspection of Embassy Panama City, Panama\nISP-S-06-31A Inspection of Embassy San Salvador, El Salvador\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 57\n\x0cISP-S-06-32A Inspection of Embassy San Jose, Costa Rica\nISP-S-06-39A Inspection of Embassy Riga, Latvia\nISP-S-06-46A Inspection of Embassy Budapest, Hungary\nISP-S-06-45A Inspection of Embassy Santiago, Chile\nISP-S-06-49A Inspection of Embassy Buenos Aires, Argentina\n\n\n\n\n58 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cAPPENDIX 3: SAVINGS AND MORE EFFECTIVE USE OF RESOURCES\n\n Table 1\n Inspector General Issued Audit Reports\n With Questioned Costs\n (Dollars in Thousands)\n\n Number Questioned Unsupported\n of Reports Costs Costs\n A. For which no management\n decision has been made by the\n commencement of the reporting 24 $26,497 $12,975\n period\n\n B. Which were issued during the\n reporting period 1 795 532\n Subtotals (A +B) 25 27,292 13,028\n\n C. For which a management decision\n was made during the report period - 1\n\n based on formal administrative or\n judicial appeal\n (i) dollar value of cost disallowed 13 1\n\n (ii) dollar value of costs not disallowed 0 0\n\n D. For which no management decision\n has been made by the end of reporting\n period 24 27,279 13,027\n\n Reports for which no\n management decision was made\n within 6 months of issuance 23 26,484 12,922\n\n\n Table 2\n Inspector General Issued Audit Reports with\n Recommendations That Funds Be Put To Better Use\n Dollar Value\n Number (In Thousands)\n .A For which no management decision has\n been made by the commencement of the\n reporting period. 3 $ 29,886\n\n B. Which were issued during the reporting\n period. 3 15,602\n\n Subtotals (A+B) 6 45,488\n\n C. For which a management decision was\n made during the reporting period. 0 0\n (i) dollar value of recommendations that\n were agreed to by management\n \xe2\x80\x93based on proposed management action\n \xe2\x80\x93based on proposed legislative action\n (ii) dollar value of recommendations\n that were not agreed to by management\n D. For which no management decision has been\n made by the end of the reporting period. 6 45,488\n Reports for which no management decision\n was made within 6 months of issuance 3 29,886\n\n\n Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 59\n\x0c60 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cAPPENDIX 4: RESOLUTION OF REPORTS AND RECOMMENDATIONS\n\n\n Signi\xef\xac\x81cant recommendations pending \xef\xac\x81nal action\n Of\xef\xac\x81ce of Audits\n AUD/CG-02-44 1 Awards to the Iraqi National Congress 10/31/2002\n\n OIG recommend that the A/ALM/AQM grants\n of\xef\xac\x81cer, in coordination with the Bureau of Near\n Eastern Affairs, should withhold, or at least restrict,\n future funding to the Iraqi National Congress\n Support Foundation until the Foundation has\n implemented adequate and transparent \xef\xac\x81nancial con-\n trols.\n\n AUD/CG-05-28 1 Review of Lutheran Immigration and Refugee Service\xe2\x80\x99s\n Reception and Placement Program 06/07/2005\n\n OIG recommended that the PRM grants of\xef\xac\x81cer\n require the Lutheran Immigration and Refugee Ser-\n vice and its subrecipients to (1) reimburse the Depart-\n ment for unallowable costs totaling $48,000 and (2)\n provide any additional supporting documentation to\n the Department so that an appropriate determination\n can be made regarding unsupported costs totaling\n $606,000.\n\n AUD/FM-05-06 1 Assessment of the Certi\xef\xac\x81cation and 12/01/2004\n Accreditation, Change Management, and Patch Management\n Process\n\n The Bureau of Information Resource Management\n should revise the security test and evaluation of the\n certi\xef\xac\x81cation and accreditation process to include a\n complete vulnerability scan of the systems being as-\n sessed.\n\n\n\n\n Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 61\n\x0cOf\xef\xac\x81ce of Inspections\n\n\nISP-I-06-18 Review of Middle East Partnership Initiative Coordination and\n Implementation 03/2006\n\nRecommendation 2: OIG recommended that the Bureau of Near Eastern Affairs, in\ncoordination with the Bureau of Administration and the Bureau of Human Resourc-\nes, should provide appropriate training for grants of\xef\xac\x81cer representatives.\n\nRecommendation 3: OIG recommended that the Bureau of Near Eastern Affairs,\nin coordination with the Bureau of Human Resources, should establish procedures\nto ensure that of\xef\xac\x81cers having Middle East Partnership Initiative responsibilities are\nbriefed on these responsibilities before taking up their overseas assignments.\n\n\nSigni\xef\xac\x81cant problems, abuses, and de\xef\xac\x81ciencies\n\nIn its review of Global Financial Services \xe2\x80\x93 Charleston (ISP-I-06-33), OIG identi\xef\xac\x81ed\nseveral serious problems:\nCerti\xef\xac\x81cation of Payments\nMost individuals certifying payments domestically at GFS-C did not have certifying\nof\xef\xac\x81cer authority, as required in 4 FAH-3 H-065.2; nonetheless, they have certi\xef\xac\x81ed\npayments amounting to over $6 billion in FY 2005. OIG recommended that the\nDepartment train and designate as certifying of\xef\xac\x81cers employees who are performing\ncertifying of\xef\xac\x81cer duties domestically.\n\nBaghdad Payroll\nThe compensation plan for Department employees in Iraq is virtually unworkable\nand complicated. In 2005, Baghdad payroll costs totaled over $57 million for base\npay and over $13 million for premium pay. The overtime pay for some employees\nappeared excessive, records were not fully reliable, and management controls on\nprocessing time and attendance reports needed strengthening. Time and attendance\nreports were forwarded for payment without the approval and signature of an autho-\nrizing direct-hire of\xef\xac\x81cial, contrary to 4 FAH-3 H-523.1. GFS-C nonetheless made\npayments based on the incomplete reports. Based on these shortcomings, OIG\nrecommended that the Department perform a full-scale, multi-location audit of the\npayroll procedures for Department employees in Baghdad, and implement proce-\ndures to process payrolls only when the time and attendance reports are properly\nprepared and approved.\n\n 62 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cFund Balance with Treasury Accounts\n\nThe Fund Balance with Treasury reconciliation for the period ending December 31,\n2005, showed an accumulated absolute difference of over $256 million between the\nTreasury and Department records. The prior years\xe2\x80\x99 differences of $204.2 million\nhad not been resolved. OIG recommended that the Department review the differ-\nences in the Fund Balance with Treasury Accounts, reconcile the differences from\nprior \xef\xac\x81scal years, and report the changes to the Treasury.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 63\n\x0c64 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cBROADCASTING BOARD OF GOVERNORS\n\x0c October 31, 2006\n\n\nMEMORANDUM\n\nTO: Mr. Kenneth Y. Tomlinson, Chairman\n Broadcasting Board of Governors\n\nFROM: OIG \xe2\x80\x93 Howard J. Krongard\n Inspector General\n\nSUBJECT: Semiannual Report to Congress, April 1 to September 30, 2006\n\nI am pleased to transmit to you the Of\xef\xac\x81ce of Inspector General\xe2\x80\x99s (OIG)\nSemiannual Report to the Congress for the period ending September 30. This\nreport is required by the Inspector General Act of 1978, as amended, and covers\nthe work of this of\xef\xac\x81ce during the period indicated. The Act requires that you\ntransmit the report to the appropriate committees of the Congress by November\n30, together with any comments you may wish to make.\n\nDuring the reporting period, OIG audited the BBG purchase card program\nand identi\xef\xac\x81ed the development of the SmartTrax system by the Of\xef\xac\x81ce of Cuba\nBroadcasting as a best practice that should be evaluated for potential use by\nother BBG\xe2\x80\x99s operations. OIG also audited the emergency preparedness at BBG\xe2\x80\x99s\nWashington Facilities and inspected the International Broadcasting Bureau\xe2\x80\x99s\nOf\xef\xac\x81ce of Performance Review.\n\nThese and other activities are summarized in this report.\n\x0c\x0c AUDITS\n\n\n\n\nReview of the Broadcasting Board of\nGovernors Purchase Card Program\n(AUD/IB-06-15)\n\nOIG reviewed the Broadcasting Board of Governors\xe2\x80\x99 (BBG) purchase card program\nto evaluate BBG\xe2\x80\x99s compliance with established federal and BBG purchase card poli-\ncies and procedures. The survey scope covered domestic purchase card operations at\nBBG in Washington, DC, and at Of\xef\xac\x81ce of Cuba Broadcasting (OCB) in Miami.\n\nOIG obtained purchase card data for BBG and OCB for FY 2004 through May 18,\n2005. These included 15,158 transactions totaling $10,390,467. For the 73 transac-\ntions reviewed, OIG did not \xef\xac\x81nd any improper purchases by the cardholders; how-\never, there were instances of missing or inadequate documentation.\n\nGovernment purchase cards are issued under the umbrella of the General Services\nAdministration\xe2\x80\x99s (GSA) SmartPay Program. Under the program, agencies are to\nconduct annual reviews to \xe2\x80\x9ccontinually improve program operations while ensuring\ncardholders and approving of\xef\xac\x81cials comply with established procurement manage-\nment practices, operating procedures, and purchase card controls.\xe2\x80\x9d OIG found that\nBBG has not conducted the annual review of the purchase card program. In ad-\ndition, BBG has not submitted the required quarterly reports on its purchase card\nprogram to the Of\xef\xac\x81ce of Management and Budget.\n\nThe GSA SmartPay contract includes incentives that give BBG the opportunity to\nearn rebates directly from the card provider based on factors such as sales volume\nand payment performance. During the \xef\xac\x81rst three quarters of FY 2005, BBG received\nrebates totaling about $31,300. BBG program managers use the rebates to fund the\npurchase card program\xe2\x80\x99s operating expenses and for such improvements as training\nfor cardholders. The rebate amount is not reconciled for accuracy by BBG \xef\xac\x81nancial\npersonnel.\n\nThe Procurement Executives Council encourages civilian agencies to expand their\nuse of purchase cards to at least 75 percent of procurement transactions up to\n$25,000. Federal Acquisition Regulation 13.301 (b) states that agency procedures\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 69\n\x0cshould not limit the use of purchase cards to micropurchases (up to $2,500), but\nshould encourage use of purchase cards in greater dollar amounts. During OIG\xe2\x80\x99s\nreview, the BBG Of\xef\xac\x81ce of Contracts agreed to survey cardholders to collect data on\npurchases being made outside the purchase card program to evaluate whether oppor-\ntunities exist for expanding purchase card use.\n\nOIG recommended that BBG formally notify program participants of the impor-\ntance of maintaining supporting documentation, developing a plan and milestones\nfor the annual program review, and reporting quarterly to the Of\xef\xac\x81ce of Management\nand Budget on its purchase card program. OIG also recommended that BBG estab-\nlish a procedure for verifying rebate amounts and develop procedures to expand the\nuse of the card.\n\nTo comply with report recommendations, BBG has initiated or proposed solutions\nthat will strengthen accountability and internal controls. Of particular note is BBG\xe2\x80\x99s\nsurvey to expand the use of the purchase cards with the potential for cost-savings.\n\n Best Practice: The Development of SmartTrax\xe2\x80\x93Purchase\n Card Transaction Tracker\n\n Issue: BBG purchase cardholders primarily use a manual system\n to record and track card purchases. The manual system is less\n ef\xef\xac\x81cient and requires more time to complete the required steps in\n the purchase card process. The manual system also limits over-\n sight by the cardholder\xe2\x80\x99s approving of\xef\xac\x81cial. A BBG purchase card\n program participant in the OCB developed an automated means to\n more ef\xef\xac\x81ciently track purchase card transactions and receipts.\n\n Response: The SmartTrax system better organizes the admin-\n istration of the purchase card process, reconciles monthly state-\n ments of account, and prepares formal reports on card transac-\n tions.\n\n Results: A demonstration of SmartTrax showed how the system\n could improve ef\xef\xac\x81ciency and cardholder monitoring, and on the\n basis of that success, the OCB director of administration imple-\n mented a more user-friendly version of the system for all OCB pur-\n chase card participants. BBG program of\xef\xac\x81cials wanted to evalu-\n ate the system for potential use by other BBG cardholders.\n\n\n\n\n 70 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cAudit of Emergency Preparedness at the\nWashington Metropolitan Facilities of the\nBroadcasting Board of Governors\n(AUD/SI-06-24)\n\nAfter the September 11, 2001, terrorist attacks, the federal government refocused its\ndomestic security needs and responsiveness requirements. Clear lines of command\nand control within an organization are essential to minimize occupant and responder\ncasualties. Integral to preparedness are such components as effective communica-\ntion networks and adequate emergency lighting, signage, and plans. Effective emer-\ngency planning can substantially reduce the loss of life, risk of personal injury, or\nproperty damage.\n\nOIG audited BBG\xe2\x80\x99s emergency preparedness to determine whether BBG had\nimplemented an Occupant Emergency Program in accordance with regulations and\nadequately developed and distributed occupant emergency plans.\n\nOIG found that although BBG had implemented an Occupant Emergency Pro-\ngram, the guidance was outdated and did not fully comply with federal regulations.\nFurthermore, BBG\xe2\x80\x99s current occupant emergency plan did not comply with federal\nregulations. In addition, OIG found that BBG employees were not fully aware of\nemergency procedures. The audit also highlighted the need for improved commu-\nnications between BBG and General Services Administration to ensure that criti-\ncal emergency and safety mechanisms are installed and operational within the BBG\nfacilities.\n\nOIG recommended that BBG\xe2\x80\x99s International Broadcasting Bureau (IBB) update its\nagency guidance; adopt, implement, and comply with pertinent regulations; and have\ncritical safety mechanisms installed within its Washington facilities.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 71\n\x0c72 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c INFORMATION TECHNOLOGY\n\n\n\n\nReview of the Information Security Program\nat the Broadcasting Board of Governors\n(IT-I-06-04)\n\nBBG has established an ambiguous reporting chain with respect to the CIO, effec-\ntively negating the capacity of the CIO to act as direct adviser to the head of agency\non IT matters. The structure also hampers the perceived authority of the CIO,\nnegatively impacting his ability to effectively implement information security re-\nquirements. BBG management has not suf\xef\xac\x81ciently involved the CIO in its strategic\nplanning process or de\xef\xac\x81ned CIO responsibilities and authorities within the process.\nBBG views the CIO position as limited to the oversight of administrative IT man-\nagement within the IBBs Of\xef\xac\x81ce of Engineering and Technical Services. By having\ngiven the CIO insuf\xef\xac\x81cient authority to implement requirements, BBG is de\xef\xac\x81cient in\ncomplying with numerous statutory responsibilities regarding information security\nand the management of information resources.\n\nIn the 2004 and 2005 FISMA reports, OIG reported that BBG had not developed an\nagency-wide IT enterprise architecture. BBG has made progress regarding the enter-\nprise architecture. However, there are other areas that have yet to be addressed, such\nas the development of a lifecycle management program for IT assets. Additionally,\nBBG has not implemented a process to be certain that its IT assets are maintained at\nan acceptable service level to prevent exploitation of vulnerabilities associated with\nlifecycle-management principles.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 73\n\x0c74 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c INSPECTIONS\n\n\n\n\nInspection of the International Broadcasting\nBureau, Of\xef\xac\x81ce of Performance Review\n(ISP-IB-06-37)\n\n\nIBB\xe2\x80\x99s Of\xef\xac\x81ce of Performance Review provides quality control by evaluating programs\nand recommending improvements for IBB, the Voice of America\xe2\x80\x99s language services,\nand the Of\xef\xac\x81ce of Cuba Broadcasting. OIG found that the performance rating scores\nthat the Of\xef\xac\x81ce of Performance Review assigns have minimal effect on strategic\ndecisions the BBG reaches through its annual Language Service Reviews and budget\npriorities. Additionally, performance rating scores also have minimal effect on IBB\nsenior management in its decisionmaking and serve only as a quality control process.\nProblemsolving discussions and action items that result from the reviews more ef-\nfectively improve broadcast services\xe2\x80\x99 quality.\n\nOIG recommended that the Of\xef\xac\x81ce of Performance Review raise IBB senior man-\nagement\xe2\x80\x99s recognition of the need to comply with action items through quarterly\nprioritized lists of its most important outstanding recommendations. OIG also\nrecommended that the IBB prioritize signi\xef\xac\x81cant remaining action items and provide\nthe information to the Broadcasting Board of Governors for consideration during\nLanguage Service Reviews.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 75\n\x0c76 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c INVESTIGATIONS\n\n\n\n\nDuring this reporting period the Of\xef\xac\x81ce of Investigations (INV) concluded a thirteen\nmonth investigation at the Broadcasting Board of Governors (BBG). The investiga-\ntion was undertaken at the request of two U.S. Senators and one member of Con-\ngress who are members of the Senate and House committees with jurisdiction over\nthe BBG. In August 2006, INV issued its Report of Investigation.\n\n\n\n\nEMPLOYEE MISCONDUCT AND\nCONTRACTING IRREGULARITIES\n\nOIG opened an investigation into allegations that a BBG employee engaged in\nextensive misuse of of\xef\xac\x81cial telephones by placing personal overseas telephone calls\non a BBG telephone. BBG reported to OIG that the cost of the personal telephone\ncalls totaled nearly $50,000. During the investigation, however, it was determined\nthat the long distance carrier had charged BBG the commercial telephone rate for\nthe calls rather than the government rate. As a result, the long distance carrier\nagreed to reimburse BBG $48,846.35 for the calls. This recovery action led BBG\nto initiate a review of other long distance telephone call billings by the carrier. To\ndate, a grand total of the overcharges by the carrier has not been determined, but has\nbeen estimated to be in excess of $300,000.\n\nThe BBG employee was arrested by OIG agents on July 14, 2006, and charged in\nDistrict of Columbia Superior Court with Second Degree Theft. On August 9,\n2006, he was terminated from employment. Prosecution is currently pending.\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 77\n\x0c78 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c APPENDIX 1: BROA D C A S TING BOA RD OF GOVE RNORS\n INVE S TIGA TIVE AC TIVITIE S\n\n\n\n Investigative Workload Number\n Cases pending 3/31/06 5\n\n New cases opened 1\n\n Cases closed 2\n\n Cases pending 9/30/06 4\n Preliminary inquires pending 3/31/06 1\n\n Preliminary inquiries opened 1\n\n Preliminary closed 1\n\n Preliminary inquiries converted to cases 0\n\n Preliminary inquiries pending 9/30/06 1\n Total Judicial Actions 0\n Prosecutive Referral 1\n\n Prosecutive Declination 1\n\n Criminal Indictment/Arrest 1\n\n Criminal Conviction 0\n\n Criminal Sentencing 0\n\n Time Sentenced 0 Months\n\n Time Probation 0 Months\n\n Court Ordered Fine $0\n\n Court Ordered Restitution $0\n Total Investigative Recoveries $0\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 79\n\x0c80 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c APPENDIX 2: RE P ORTS IS S UE D\n\n\n\nAUD/IB-06-15 Review of the Broadcasting Board of Governors\xe2\x80\x99 Purchase\n Card Program\n\nAUD/SI-06-24 Audit of Emergency Preparedness at the Washington\n Metropolitan Facilities of the Broadcasting Board\n of Governors\n\nIT-I-06-04 Review of the Information Security Program at the\n Broadcasting Board of Governors\n\nISP-IB-06-37 Inspection of the International Broadcasting Bureau\xe2\x80\x99s (IBB)\n Of\xef\xac\x81ce of Performance Review\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 81\n\x0c82 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cAPPENDIX 3: SAVINGS & MORE EFFECTIVE USE OF RESOURCES\n\n\n Table 1\n Inspector General Issued Audit Reports\n With Questioned Costs\n (Dollars in Thousands)\n Number of Reports Questioned Costs Unsupported\n Costs\n A. For which no management\n decision has been made by the\n commencement of the reporting\n period 0 0 0\n\n B. Which were issued during the\n reporting period 0 0 0\n Subtotals (A+B) 0 0 0\n\n C. For which a management decision\n was made during the report period -\n based on formal administrative or\n judicial appeal\n (i) dollar value of cost disallowed 0 0 0\n (ii) dollar value of costs not disallowed 0 0 0\n\n D. For which no management decision\n has been made by the end of reporting\n period 0 0 0\n Reports for which no\n management decision was made\n within 6 months of issuance 0 0 0\n\n Table 2\n Inspector General Issued Audit Reports with\n Recommendations That Funds Be Put To Better Use\n Numbers Dollar Value\n (in thousands)\n A. For which no management decision has\n been made by the commencement of the\n reporting period. 0 0\n\n B. Which were issued during the reporting\n period. 0 0\n Subtotals (A+B) 0 0\n C. For which a management decision was\n made during the reporting period. 0 0\n (i) dollar value of recommendations that\n were agreed to by management\n - based on proposed management action\n - based on proposed legislative action\n (ii) dollar value of recommendations\n that were not agreed to by management\n D. For which no management decision has been 0 0\n . made by the end of the reporting period.\n . Reports for which no management decision\n was made within 6 months of issuance. 0 0\n\n\n\n Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 83\n\x0c84 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0c LIST OF ABBREVIATIONS\n\n\n\n\n A/LM/AQM Bureau of Administration, Of\xef\xac\x81ce of Logistics\n Management, Of\xef\xac\x81ce of Acquisition Management\n BBG Broadcasting Board of Governors\n DCM Deputy Chief of Mission\n Department Department of State\n DHS Department of Homeland Security\n DS Bureau of Diplomatic Security\n FISMA Federal Information Security Management Act\n GFS-C Global Financial Services - Charleston\n ICASS International Cooperative Administrative Support\n Services\n INL Bureau of International Narcotics and Law\n Enforcement\n OIG Of\xef\xac\x81ce of Inspector General\n OBO Bureau of Overseas Buildings Operations\n RM Bureau of Resource Management\n SIGIR Special Inspector General for Iraq Reconstruction\n USAID U.S. Agency for International Development\n VAT Value-added taxes\n\n\n\n\nOf\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006 85\n\x0c INDEX OF REPORTING REQUIREMENTS\n INSPECTOR GENERAL ACT OF 1978, AS AMENDED\n\n\n\n\nREQUIREMENT SUBJECT PAGE NUMBERS\n\nSection 4(a)(2) Review of legislation and regulations 10\nSection 5(a)(1) Signi\xef\xac\x81cant problems, abuses, and de\xef\xac\x81ciencies 17-45, 69-71\n\nSection 5(a)(2) Signi\xef\xac\x81cant recommendations for corrective action 13-46, 67-69\n\nSection 5(a)(3) Prior signi\xef\xac\x81cant recommendations unimplemented 61-62\n\nSection 5(a)(4) Matters referred to prosecutive authorities 47-51, 77\n\nSection 5(a)(5) Information or assistance refused none\n\nSection 5(a)(6) List of reports issued 55-58, 81\n\nSection 5(a)(7) Summaries of signi\xef\xac\x81cant reports 17-45, 69-71\n\nSection 5(a)(8) Audit reports\xe2\x80\x93questioned costs 59, 83\n\nSection 5(a)(9) Audit reports\xe2\x80\x93funds to be put to better use 59, 83\n\nSection 5(a)(10) Prior audit reports unresolved 59-61, 83\n\nSection 5(a)(11) Signi\xef\xac\x81cant revised management decisions none\n\nSection 5(a)(12) Signi\xef\xac\x81cant management decisions with which\n OIG disagreed none\n\n\n\n\n 86 Of\xef\xac\x81ce of Inspector General Semiannual Report to the Congress, April 1, 2006, to September 30, 2006\n\x0cFRAUD, WASTE, ABUSE, OR MISMANAGEMENT\n of Federal programs and resources\n hurts everyone.\n\n Call the Of\xef\xac\x81ce of Inspector General\n HOTLINE\n 202/647-3320\n or 1-800-409-9926\n or e-mail oighotline@state.gov\n to report illegal or wasteful activities.\n\n You may also write to\n Of\xef\xac\x81ce of Inspector General\n U.S. Department of State\n Post Of\xef\xac\x81ce Box 9778\n Arlington, VA 22219\n\n Please visit our website at oig.state.gov\n\n Cables to the Inspector General\n should be slugged \xe2\x80\x9cOIG Channel\xe2\x80\x9d\n to ensure con\xef\xac\x81dentiality.\n BLE OF CONTENTS\n\x0c\x0c'