# [Appendix A]{.smallcaps} INSPECTOR GENERAL'S ASSESSMENT OF MANAGEMENT CHALLENGES FACING NARA {#appendix-a-inspector-generals-assessment-of-management-challenges-facing-nara .AR-Part-Title}

Under the authority of the Inspector General Act, the NARA OIG conducts
and super­vises independent audits, investigations, and other reviews to
promote economy, efficiency, and effectiveness and prevent and detect
fraud, waste, and mismanagement. To fulfill that mission and help NARA
achieve its strategic goals, we have aligned our programs to focus on
areas that we believe represent the agency's most significant
challenges. We have identified those areas as NARA's top 10 management
challenges. Under these are the related audits, investigations, and
reviews that were performed in FY 2004.

1.  **Electronic Records Archives (ERA)**

NARA, in research and development collaboration with national and
international part­ners, is building an Electronic Records Archives (ERA)
with the goal of ensuring the preservation of, and access to, Government
electronic records. The pace of technological progress makes formats in
which the records are stored obsolete within a few years, threatening to
make them inaccessible even if they are preserved intact.

ERA is to be a comprehensive, systematic, and dynamic means of
preserving virtually any kind of electronic record, free from dependence
on any specific hardware or soft­ware. The ERA system is targeted to make
it possible for Federal agencies to transfer any type or format of
electronic record to the National Archives, so that citizens can locate
records of interest and the National Archives can deliver these
materials in a usable format.

NARA's challenge is to build a system that will accommodate past,
present, and future formats of electronic records. To mitigate the risks
associated with development and acqui­sition of an advanced electronic
archival system, Congress directed NARA to reassess the ERA project
schedule based on estimates of the amount of work and re­sources required
to complete each task. Beginning on October 1, 2002, NARA was required
to submit to Congress a quarterly report on the status of the project's
schedule, budget, and expenditures as measured against a reported
baseline; a prioritization of project risks and their mitigation
efforts; and corrective actions taken to manage identi­fied schedule
slippage, cost overruns, or quality problems that might occur. By 2007,
NARA plans to have initial operating capability for ERA with incremental
improve­ments that will eventually result in full system capability. The
challenge will be to deliver and maintain a functional ERA system that
will preserve electronic records for as long as needed.

**2. Electronic Records Management (ERM)**

NARA directs one of 24 Government-wide initiatives, the Electronic
Records Manage­ment (ERM) initiative. The ERM initiative will provide
guidance to agencies in managing and transferring to NARA, in an
increasing variety of data types and formats, their permanent electronic
records. For many years, Federal records were created on paper and
stored in files and boxes with NARA. Now, electronic records are created
by Gov­ern­ment agencies at an astounding rate, challenging NARA to find
ways to manage and preserve them. In 2002, NARA became a key player in
e-Government and managing partner for the e-Government ERM initiative.
E-Government is part of President Bush's management agenda aimed at
making it easier for citizens to obtain high-quality service from the
Federal Government while reducing the cost of delivering those services.
During 2002, NARA enlisted partner agencies, developed a detailed plan
for accom­plishing its objectives, and issued the first guidance on
transferring e-mail records to NARA.

NARA and its Government partners are challenged with trying to figure
out how to manage electronic records in an electronic manner, to make
ERM and e-Government work more effectively.

**3. Improving Records Management**

NARA's mission is to ensure that Federal officials and the American
public have ready access to essential evidence. One way NARA addresses
its mission is by assisting agencies with the management of their
records from the time that those records are created. Without effective
records management, records needed to document citizens' rights, actions
for which Federal officials are responsible, and the historical
experience of our nation will be at risk of loss, deterioration, or
destruction. According to NARA's Strategic Plan, to minimize these
risks, NARA will work in active partnership with the Administration,
Federal officials, the Congress, and Federal courts to help them create,
identify, appropriately schedule, and manage record material. This will
enable the Govern­ment to preserve records as long as they are needed to
protect rights, ensure accountability, document the national experience,
and to destroy records as soon as it is practical to do so when they are
no longer needed.

NARA must work with Federal agencies to make scheduling, appraisal, and
accessioning processes more effective and timely. The challenge is how
best to accomplish this com­ponent of our overall mission and identify
and react to agencies with critical records management needs.

***4.* Information Technology Security**

Since FY 2000, the Archivist has identified computer security as a
material weakness in his assurance statements to the President. While
corrective steps have been taken, some actions have not been completed,
and the agency continues to work on additional measures to strengthen
NARA's overall information technology (IT) security posture. The
authenticity and reliability of our electronic records and information
technology systems are only as good as our IT security infrastructure.
Each year, the risks and challenges to IT security continue to evolve.
NARA must ensure the security of its data and systems or risk
undermining the agency's credibility and ability to carry out its
mission.

IT security becomes even more critical as NARA increases its visibility
through the implementation of e-Government initiatives that expand
online services to the public. The more NARA increases electronic access
to its services and records, the more vulnerable the agency is to
intrusions, viruses, privacy violations, fraud, and other abuses of its
systems. The risk related to IT security is endemic to all Federal
agencies and has been identified by the GAO as one of its top 10
high-risk challenges.

+-----------------------------------------------------------------------+
| > *Audits, investigations, and reviews performed in FY 2004:*         |
+-----------------------------------------------------------------------+
| -   Assessment of the Controls and Security of NARA Classified        |
|     Systems                                                           |
+-----------------------------------------------------------------------+
| -   Vulnerability of NARA E-mail to Unauthorized Access               |
+-----------------------------------------------------------------------+
| -   Evaluation of NARA's Computer Incident Response Capability        |
+-----------------------------------------------------------------------+
| -   Follow Up Review of OIG Report #00-02, Review of NARA's Process   |
|     for Investing in IT Projects                                      |
+-----------------------------------------------------------------------+
| -   Hacker Exploits NARA IT Vulnerability                             |
+-----------------------------------------------------------------------+
| -   Information on NARA's Public Website Puts NARA at Risk            |
+-----------------------------------------------------------------------+
| -   Evaluation of the First Performance Period Award Fee              |
|     Determination Process for the Fixed-Price-Award-Fee (FPAF)        |
|     Contract with a NARA Contractor                                   |
+-----------------------------------------------------------------------+
| -   Investigation of Misuse of Internet by NARA Employee              |
+-----------------------------------------------------------------------+
| -   Investigation of Child Pornography                                |
+-----------------------------------------------------------------------+

**5. Expanding Public Access to Records**

In a democracy, the records of its archives belong to its citizens.
NARA's challenge is to more aggressively inform and educate our
customers about the services we offer and the essential evidence to
which we can provide access. NARA envisions expanding oppor­tunities for
individual citizens, educational institutions, and Federal agencies to
make use of those records. New technologies are making it easier to
reach all users in their homes, schools, and workplaces. NARA must
increase partnerships with Government agencies at all levels and with
universities and corporate communities to take advantage of new means to
bring the holdings of the National Archives to people no matter where
they are located.

Mastering this challenge requires that NARA listen to its customers, and
improve access to records in ways that meet customer needs and customer
service standards. This will require NARA to enhance activities such as
creating comprehensive catalogs and indexes for our holdings so that
users can find the records they need; make documentary mate­rial
available through the Internet; improve reference service; and help
Presidents at the beginning of their administrations plan for public
access to their records in Presidential libraries.

**6. Meeting Storage Needs of Growing Quantities of Records**

NARA-promulgated regulation, 33CFR, Part 1228, "Disposition of Federal
Records," Subpart K, "Facility Standards for Records Storage
Facilities," requires all facilities that house Federal records to meet
defined physical and environmental requirements by FY 2009.

Specifically, in January 2000, NARA revised the regulations for public
and private facilities that store Federal records to (1) improve the
environment and safeguards for Federal records by incorporating stricter
facility standards and advances in sprinkler technology; (2) reflect
building design measures that may prevent or minimize fire and water
damage to records; and (3) ensure uniform facility standards for all
records cen­ters, both public and private, that store and protect Federal
records. NARA's chal­lenge is to ensure compliance with these regulations
internally as well as by other agencies that house Federal records.

+-----------------------------------------------------------------------+
| > *Audits, investigations, and reviews performed in FY 2004:*         |
+-----------------------------------------------------------------------+
| -   Assessment of NARA's Efforts to Comply with New Facility          |
|     Standards                                                         |
+-----------------------------------------------------------------------+
| -   Investigation of Train Derailment Carrying IRS Records in NARA's  |
|     Possession; Contractor Found to be in Violation of Contract       |
+-----------------------------------------------------------------------+

**7. Preservation Needs of Records**

NARA cannot provide public access to records to support researchers'
needs unless it can preserve them for as long as needed. Providing
public access to records for future gener­a­tions requires that NARA
assess the preservation needs of the records, provide storage that
retards deterioration, and treat or duplicate and reformat records at
high-risk for deterioration. NARA must preserve paper records and motion
pictures, audio record­ings, videotapes, still photography, aerial
photography, microfilm and other microforms, and maps and charts in a
variety of formats in our holdings. NARA must ensure that its risk
management program adequately identifies and addresses all records
needing preservation in a timely manner.

As in the case of our national infrastructure (bridges, sewer systems,
etc.), NARA holdings grow older daily and are degrading. NARA is
challenged to address the following questions: Are we effectively
identifying those holdings that are both most at risk and most important
in terms of priority. Who makes this determination, upon what criteria
is it based, and is it being soundly and properly applied? Are resources
and the technology available and sufficient to meet the preservation
needs of these records?

**8. Improving Financial Management**

By inclusion under the Accountability of Tax Dollars Act of 2002, NARA
is required to prepare audited financial statements in compliance with
prescribed standards, subject to independent audit. This will present a
challenge to NARA, especially as the OMB accel­erates the due date for
submitting consolidated audited financial statements and other
performance reports into a combined Performance and Accountability
Report.

The Federal Government has a stewardship obligation to prevent fraud,
waste, and abuse; to use tax dollars appropriately; and to ensure
financial accountability to the President, the Congress, and the
American people. Timely, accurate, and useful financial information is
essential for making day-to-day operating decisions; managing the
Gov­ernment's operations more efficiently, effectively, and economically;
meeting the goals of the Federal financial management reform legislation
(Chief Financial Officers Act); supporting results-oriented management
approaches; and ensuring accountability on an ongoing basis.

In identifying improved financial performance as one of its five
Government-wide initiatives, the President's Management Agenda (PMA)
stated that a clean financial audit is a basic prescription for any
well-managed organization and recognized that "most federal agencies
that obtain clean audits only do so after making extraordinary,
labor-intensive assaults on financial records." Further, the PMA stated
that without sound internal controls and accurate and timely financial
information, it is not possible to ac­com­plish the President's agenda to
secure the best performance and highest measure of accountability for
the American people.

The agency will be challenged in its ability to comply with the newly
issued Accounta­bility of Tax Dollars Act of 2002 much as Chief Financial
Officer (CFO) agencies were challenged in the initial year following the
passage of the CFO Act.

+-----------------------------------------------------------------------+
| > *Audits, investigations, and reviews performed in FY 2004:*         |
+-----------------------------------------------------------------------+
| -   Audit of the National Archives Records Center Revolving Fund FY   |
|     2002 Financial Statements                                         |
+-----------------------------------------------------------------------+
| -   Audit of the National Archives Trust Fund FY 2002 Financial       |
|     Statements                                                        |
+-----------------------------------------------------------------------+
| -   Audit of the National Archives Gift Fund FY 2002 Financial        |
|     Statements                                                        |
+-----------------------------------------------------------------------+
| -   Audit of NARA's Interagency Agreements                            |
+-----------------------------------------------------------------------+
| -   Audit of the Transit Benefit Program                              |
+-----------------------------------------------------------------------+
| -   Review of the Contractor Compliance with Government Auditing      |
|     Standards (GAS) for the Audit of the National Archives Trust and  |
|     Gift Funds FY 2002 Financial Statements                           |
+-----------------------------------------------------------------------+
| -   Review of the Contractor Compliance with GAS for the Audit of the |
|     National Archives Records Center Revolving Fund FY 2002 Financial |
|     Statements                                                        |
+-----------------------------------------------------------------------+
| -   Evaluation of NARA's FY 2003 Management Control Program           |
+-----------------------------------------------------------------------+
| -   Review of NARA's Water and Sewer Billing Adjustment Charge        |
+-----------------------------------------------------------------------+
| -   Review of University of Texas Invoice for Utility Costs for the   |
|     Lyndon B. Johnson Library                                         |
+-----------------------------------------------------------------------+
| -   Investigation of NARA Cashier Pocketing Money Received from       |
|     Customers                                                         |
+-----------------------------------------------------------------------+
| -   Investigation of NARA Employee Splitting Purchases with           |
|     Government Credit Card to Exceed Purchase Authority               |
+-----------------------------------------------------------------------+
| -   Investigation of NARA Employee Failing to Report Money Found at   |
|     Presidential Library                                              |
+-----------------------------------------------------------------------+
| -   Investigation of Misuse of Government Credit Card                 |
+-----------------------------------------------------------------------+
| -   Investigation of Fraud Involving Transit Benefits                 |
+-----------------------------------------------------------------------+
| -   Investigation of Government Purchase Card Abuse                   |
+-----------------------------------------------------------------------+

**9. Physical Security**

NARA must maintain adequate levels of physical security over our
facilities and hold­ings to ensure the safety and integrity of persons
and holdings within our facilities. This is especially critical in light
of the new realities that face this nation, post--September 11, and the
risks that our holdings may be pilfered by persons for a variety of
motivations, defaced, or destroyed by fire or other natural disasters.

The Archivist has identified security of collections as a material
weakness under the Financial Manager's Financial Integrity Act (FMFIA)
reporting process. Our facilities hold records that serve to document
the rights of citizens, the actions of Government officials, and the
national experience. They also hold a new class of records identified as
"Records of Concern" (ROC). These are records that could be useful to
individuals or entities in the planning and conduct of hostile acts
against this nation.

Three primary challenges facing NARA are to (1) provide quality service
to our custo­mers while instituting reasonable internal controls to
prevent theft and to maintain documentation for supporting recovery of
disenfranchised holdings and subsequent prosecution of those who would
steal from NARA, (2) take every reasonable, appropriate measure possible
to limit access to ROC and act expeditiously in coordinating efforts
with appropriate law enforcement entities as warranted and appropriate,
and (3) protect and safeguard our facilities and the employees who work
in them and to mitigate the potential for damage and destruction through
both natural and deliberately precipitated acts.

+-----------------------------------------------------------------------+
| > *Audits, investigations, and reviews performed in FY 2004:*         |
+-----------------------------------------------------------------------+
| -   Audit of a Subcontractor's Proposal for Archives I Stack Lighting |
+-----------------------------------------------------------------------+
| -   Investigation of Alleged Misuses of Government Vehicles           |
+-----------------------------------------------------------------------+
| -   Investigation of Theft of Personal Checks from NARA Facility by   |
|     NARA Contractor                                                   |
+-----------------------------------------------------------------------+
| -   Investigation of Employee Bomb Threat Results in Termination and  |
|     Criminal Conviction                                               |
+-----------------------------------------------------------------------+
| -   Investigation of Recovery of Stolen NARA Computer                 |
+-----------------------------------------------------------------------+
| -   Proactive Identification of Taylor Pardon Stolen by former NARA   |
|     Employee                                                          |
+-----------------------------------------------------------------------+

10. **Strengthening Human Capital**

The GAO has identified human capital as a Government-wide high risk.
Strategic human capital management should be the centerpiece of any
serious change management initia­tive or any effort to transform the
cultures of Government agencies. Serious human capital shortfalls,
however, continue to erode the ability of many agencies, and threaten
the ability of others, to economically, efficiently, and effectively
perform their missions. According to GAO, the major problem is the lack
of a consistent strategic approach to marshaling, managing, and
maintaining the human capital needed to maximize Govern­ment performance
and ensure its accountability. People are an agency's most important
organizational asset. An organization's people define its character,
affect its capacity to perform, and represent the knowledge base of the
organization. Agencies can improve their performance by the way that
they treat and manage their people and building commitment and
accountability through involving and empowering employees.

NARA's challenge is to adequately assess its human capital needs in
order to effectively recruit, retain, and train people with the
technological understanding and content knowledge that NARA needs for
future success. According to NARA's Strategic Plan, NARA must include
preparation for training the leaders of tomorrow in its plans. Further,
NARA must help those current staff members possessing traditional
archival training to add skills necessary for working with new
technologies. In addition, NARA must replace valuable staff members lost
to retirement with others able to deal with records in the electronic
information age. Moreover, NARA must partner with univer­sities and
professional associations to determine educational requirements for the
21st century.

+-----------------------------------------------------------------------+
| > *Audits, investigations, and reviews performed in FY 2004:*         |
+-----------------------------------------------------------------------+
| -   Investigation of Employee Discipline for Time and Attendance      |
|     Abuse                                                             |
+-----------------------------------------------------------------------+
| -   Investigation of Time and Attendance Errors                       |
+-----------------------------------------------------------------------+

# [Appendix B]{.smallcaps} FEDERAL MANAGERS' FINANCIAL INTEGRITY ACT REPORT {#appendix-b-federal-managers-financial-integrity-act-report .AR-Part-Title}

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#  {#section-1 .AR-Part-Title .unnumbered}

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