prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: This report addresses frequently asked questions related to the overtime provisions in the Fair Labor Standards Act (FLSA) for executive, administrative, and professional employees (the "EAP" or "white collar" exemptions)  For a history of DOL regulations on the EAP exemptions, see CRS Report R45007, Overtime Exemptions in the Fair Labor Standards Act for Executive, Administrative, and Professional Employees , by David H  Bradley  For a broader overview of the FLSA, see CRS Report R42713, The Fair Labor Standards Act (FLSA): An Overview   This report proceeds in three sections  First, there is an overview of the main federal statute on overtime pay—the FLSA—and of defining and delimiting the EAP exemptions  Second, there is a discussion of the applicability of the EAP exemptions  Finally, there is information on the EAP exemptions in the 2019 proposed rule and the 2016 final rule (which was finalized but invalidated before it took effect)  The FLSA, enacted in 1938, is the main federal law that establishes minimum wage and overtime pay requirements for most, but not all, private and public sector employees  Section 7(a) of the FLSA specifies that unless an employee is specifically exempted in the FLSA, he or she is considered to be a covered "nonexempt" employee and must receive pay at the rate of one-and-a-half times ("time and a half") the employee's regular rate for any hours worked in excess of 40 hours in a workweek  When the FLSA was enacted, Section 13(a)(1) provided an exemption, from both the minimum wage (Section 6) and overtime (Section 7) provisions of the act, for "any employee employed in a bona fide executive, administrative, and professional capacity " Rather than define the terms executive, administrative, or professional employee, the FLSA authorizes the Secretary of Labor to define and delimit these terms "from time to time" by regulations   The general rationale for including the EAP exemption in the FLSA at the time of enactment was twofold  One, the nature of the work performed by EAP employees seemed to make standardization difficult and thus output of EAP employees was not as clearly associated with hours of work per day as it was for typical nonexempt workers  Two, bona fide EAP employees were considered to have other forms of compensation (e g , above-average benefits, greater opportunities for advancement) not available to nonexempt workers  As mentioned, the Secretary of Labor is authorized to define and delimit the EAP exemptions  Including the first rulemaking on EAP exemptions in 1938, DOL has finalized nine rules  Although the determinations have changed over time, to qualify for an exemption currently under Section 13(a)(1) of the FLSA (i e , not to be entitled to overtime pay), an employee generally has to meet three criteria: 1  The "salary basis" test: the employee must be paid a predetermined and fixed salary  2  The "duties" test: the employee must perform executive, administrative, or professional duties  3  The "salary level" test: the employee must be paid above the threshold established in the rulemaking process, typically expressed as a per week rate  To qualify for the EAP exemption, an employee must be paid on a "salary basis," rather than on a per hour basis  That is, an EAP employee must receive a predetermined and fixed payment that is not subject to reduction due to variations in the quantity or quality of work  The salary must be paid on a weekly or less-frequent basis  Job titles alone do not determine exemption status for an employee  Rather, the Secretary of Labor, through issuance of regulations, specifies the duties that EAP employees must perform to be exempt from the overtime pay requirements of the FLSA  To qualify for the exemption for executive employees , all of the following job duties tests must be met: the employee's primary duty "is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof"; the employee "customarily and regularly directs the work of two or more other employees"; and the employee "has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight " To qualify for the exemption for administrative employees , both of the following job duties tests must be met: the employee's primary duty "is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers"; and the employee's primary duty "includes the exercise of discretion and independent judgment with respect to matters of significance " To qualify for the exemption for professional employees , the following job duties test must be met: The employee's primary duty is the performance of work requiring "knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction"; or work "requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor " In addition to the duties test, an employee must earn above a certain salary in order to qualify for the EAP exemption  Since the FLSA was enacted and the first salary thresholds were established in 1938, the standard salary level thresholds have been raised nine times  Prior to 2004, the salary level for exemption varied by the type of employee and the type of duty test  In addition to the standard salary level, in 2004 DOL created a "highly compensated employee" (HCE) exemption in which employees earning an amount above the standard EAP salary threshold annually are exempt from overtime requirements if they perform at least one (among many) of the duties of an EAP employee  Because the FLSA applies to "employees," individuals who are classified as independent contractors are not covered by the FLSA provisions  Yes  There is no general exemption for nonprofits in the FLSA or the EAP overtime regulations  Coverage for workers in nonprofits, like other entities, is determined by the enterprise and individual coverage tests  It is important to note, however, that charitable activities often associated with nonprofits do not count as ordinary commercial activities and thus do not count toward the $500,000 threshold for enterprise coverage under the FLSA  Only the commercial activities of nonprofits (e g , gift shops, fee for service activities) count toward that threshold  On the other hand, even if a nonprofit does not meet the enterprise test for coverage, individual employees in an otherwise exempt nonprofit may be covered by the FLSA and the overtime rules if they engage in interstate commerce (e g , regularly making out of state phone calls, processing credit card transactions)  Yes  Both the FLSA and the EAP overtime regulations apply to institutions of higher education (IHEs)  Due to other provisions of the FLSA, however, many personnel at IHEs are not eligible for overtime on the basis of the duties test alone and thus are unaffected by changes in the EAP standard salary level for exemption  For example, in general, bona fide teachers are exempt regardless of salary level and thus are not eligible for overtime  Similarly, academic administrative personnel are exempt from overtime pay if they are paid at least the EAP salary level threshold or are paid at least equal to the entrance salary for teachers at the same institution  On the other hand, some IHE workers would be affected by changes in the EAP salary level for exemption, including postdoctoral researchers who are employees, nonacademic administrative employees, and other salaried workers who are not covered by another exemption  Finally, like some public sector employers, but unlike private sectors employers, public IHEs may have the option of using compensatory time (i e , a rate of 1 5 hours for each hour of overtime), rather than cash payment, to meet the obligation of providing overtime compensation  Yes  There is no blanket exemption from FLSA and overtime rule coverage for state and local governments  In general, employees of state and local governments are covered by the overtime provisions of the FLSA and thus are affected by EAP rulemaking updating the salary level threshold for the EAP exemptions  That said, other FLSA provisions apply to state and local governments that affect the applicability of overtime rules to these public sector employees  One way in which FLSA overtime rules apply differently in the public sector relates to the mode of compensation  State and local governments may have the option of using compensatory time, at a rate of 1 5 hours for each hour of overtime, rather than cash payment to meet the obligation of providing overtime compensation—an alternative not available to private sector employers  Additionally, some public sector employees are not covered by the FLSA  For instance, certain state and local employees—elected officials, their appointees and staff who are not subject to civil service laws, and legislative branch employees not subject to civil service laws—are not covered and will not be affected by changes to the EAP exemptions  The FLSA provides partial exemptions from the overtime requirements for fire protection and law enforcement employees  Specifically, fire protection and law enforcement employees are exempt from overtime pay requirements if they are employed by an agency with fewer than five fire protection or law enforcement employees  In addition, the FLSA allows overtime for all fire protection and law enforcement employees (not just those in small agencies) to be calculated on a "work period" (i e , 7 to 28 consecutive days) rather than the standard "workweek" period (i e , 7 consecutive 24-hour periods)  Yes  The FLSA overtime provisions apply to employees in the U S  territories—American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U S  Virgin Islands  While the exemption for American Samoa has traditionally been set at 84% of the standard salary level, the other territories have been subject to the standard level  The application of the provisions of the FLSA is determined by the Congressional Accountability Act (CAA, P L  104-1 ), which was enacted in 1995 and extends some FLSA provisions, including overtime provisions, and other labor and workplace laws to congressional employees  In addition, the CAA created the Office of Compliance (now the Office of Congressional Workplace Rights), headed by a five-member Board of Directors (Board), to enforce the CAA  Rulemaking on the EAP exemptions would apply to congressional staff if the Board adopts them and Congress approves the Board's regulations, pursuant to the process established in the CAA  In other words, regulations adopted by the Board do not have legal effect until they are approved by Congress  When the Secretary of Labor issued new regulations to update the EAP exemptions in 2004, the Board adopted them; but thus far, Congress has apparently not approved the 2004 overtime regulations  Thus, overtime regulations that were adopted by the Board and approved by Congress in 1996, based on DOL regulations originally promulgated in 1975, currently apply to congressional staff  In the absence of action by the Board and by Congress, the provisions in any future final rules would not change the status quo  Congress can pass legislation to repeal rules or compel new rules  For example, prior to the publication of the 2016 final rule, legislation was introduced that would have prohibited the Secretary of Labor from enforcing the final rule and would have required additional analysis from the Secretary before the issuance of any substantially similar rule in the future  Given that rulemaking on the EAP exemptions typically includes increases in the salary level threshold for the EAP exemption, a greater number of employees become eligible for overtime pay with each upward adjustment of the salary level  To comply with the proposed regulations, employers would have several options, including the following: pay overtime to newly covered EAP employees if they work more than 40 hours in a workweek; increase the weekly pay for workers near the salary threshold to a level above it so that the EAP employees would become exempt and thus not be eligible for overtime pay; reduce work hours of nonexempt (covered) employees to 40 or fewer so that overtime pay would not be triggered; hire additional workers to offset the reduction in hours from nonexempt employees; or reduce base pay of nonexempt workers and maintain overtime hours so that base pay plus overtime pay would not exceed, or would remain close to, previous employer costs of base pay plus overtime  This section provides an overview of the main provisions of the 2019 proposed rule on EAP exemptions  For context, some provisions of the 2016 final rule are discussed  A final rule updating the EAP exemptions was published in the Federal Register on May 23, 2016, with an effective date of December 1, 2016  However, on November 22, 2016, the U S  District Court for the Eastern District of Texas issued a preliminary injunction blocking the implementation of the rule  On August 31, 2017, the U S  District Court for the Eastern District of Texas ruled that DOL exceeded its authority by setting the threshold at the salary level in the 2016 final rule ($913 per week) and thus invalidated it  Subsequently, DOJ appealed that decision to the U S  Court of Appeals for the Fifth Circuit, which granted DOJ's motion to hold the appeal in abeyance until DOL issued new rulemaking on the EAP salary level  Thus, DOL is currently enforcing the EAP regulations in effect on November 30, 2016, which include a standard salary level of $455 per week  DOL issued a request for information (RFI) related to the EAP exemptions on July 26, 2017, seeking information from the public to assist in formulating a proposal to revise the exemptions  On March 22, 2019, a Notice of Proposed Rulemaking (NPRM) was published in the Federal Register to define and delimit EAP exemptions  The proposed rule would not only revise the regulations on the EAP exemptions but would also formally rescind the 2016 final rule  Such a rescission would provide that if any or all of the substantive provisions of the 2019 rule were invalidated or not put into effect, the EAP regulations would revert to those promulgated in the 2004 final rule  Due to the invalidation of the 2016 final rule (discussed above), DOL currently enforces the provisions of the 2004 final rule  The main changes to the EAP exemptions in the 2019 proposed rule, as summarized in Table 1 , include the following: an increase in the salary level test from the current $455 per week ($23,660 annually) to $679 per week ($35,308 annually); an increase in the annual salary threshold for the HCE exemption from $100,000 to $147,414; an allowance that up to 10% of the standard salary level may be comprised of nondiscretionary bonuses, incentive payments, and commissions; a salary level of $455 per week for the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U S  Virgin Islands, and of $380 in American Samoa; and an increase in the "base rate" weekly salary level for employees in the motion picture industry from $695 per week to $1,036 per week  Since the FLSA was enacted in 1938, the salary level threshold has been increased eight times, including the proposed 2019 increase  Each of the previous increases have occurred through intermittent rulemaking by the Secretary of Labor, with periods between adjustments ranging from 2 years (1938–1940) to 29 years (1975–2004)  Since 1938, measures of the salary level have fluctuated according to DOL's identification of data sources most suitable for studying wage distributions and the department's determinations of the proportion and types of workers who should be below salary thresholds, as well as its determinations of whether regional, industry, or cost-of-living considerations should be factored into salary tests  Starting with the 2004 final rule, DOL has used survey data from the Current Population Survey (CPS) in determining the salary level for the EAP exemptions, albeit with different methodological choices  Effective January 2020 (approximately), the standard salary level threshold would equal the 20 th percentile of weekly earnings of full-time non-hourly workers in the lowest-wage Census region, which in 2019 is the South, and/or in the retail sector nationwide  In 2020, about 20% of full-time salaried workers in the South region and/or the retail sector nationwide are estimated to earn at or below $679 per week ($35,308 annually)  Effective January 2020 (approximately), the HCE salary level for the EAP exemptions would equal the annual earnings equivalent of the 90 th percentile of the weekly earnings of full-time non-hourly workers nationally  In 2020, 90% of full-time non-hourly workers are estimated to earn at or below $147,414 per year  Effective January 2020 (approximately), the salary level for the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U S  Virgin Islands would be $455 per week, and in American Samoa it would be $380 per week  Except for American Samoa, this would depart from past regulations by establishing a salary threshold for the territories below the standard level  Effective January 2020 (approximately), the motion picture industry employee salary level for the EAP exemption would be $1,036 per week  This level was derived by increasing the previous threshold ($695 per week) proportionally to the increase in the standard salary level  This would continue a special salary test created in 1953 for the motion picture industry that provides an exception to the "salary basis" test  Specifically, employees in the motion picture industry may be classified as exempt if they meet the duties tests for EAP exemption and are paid a "base rate" (rather than on a "salary basis") equal to the salary level for this exemption  The 2019 proposed rule would implement a commitment by DOL to update the EAP salary level thresholds every four years by submitting an NPRM for comment  If the 2019 proposed rule is finalized, DOL would publish its first proposed update on January 1, 2023, and subsequent updates every four years thereafter  The future salary level updates would be based on the same data source (CPS) and methodology of the salary levels established in the 2019 proposed rule: the standard salary level would be adjusted to the 20 th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region and/or in the retail sector, the HCE salary level threshold would be adjusted to the 90 th percentile of annual earnings of full-time non-hourly workers nationally, and the quadrennial NPRM would seek comment on whether to update the salary level for the territories established in the 2019 proposed rule  The 2019 proposed rule would expand overtime coverage to EAP employees through a higher salary level threshold rather than through additional classes of employees  As such, EAP employees making between $455 per week (the current effective level) and the new rate of $679 per week in 2019 would likely become nonexempt (i e , covered) by the overtime provisions and entitled to overtime pay for hours worked in excess of 40 per workweek  It is difficult to project the number of employees currently exempt under the EAP exemptions who would no longer be exempt under the 2019 proposed rule  This is due in part to uncertainty about potential employer responses, such as increasing salaries above the new threshold to maintain exemption for EAP employees  DOL estimates, with caveats, that approximately 4 9 million workers would be affected by the proposed rule  DOL identifies two groups in particular that would be affected—newly covered workers and workers with strengthened protections  Specifically, DOL estimates the following: In the first year under the provisions of the 2019 proposed rule, about 1 3 million EAP employees would become newly entitled to overtime pay due to the increase in the salary threshold: about 1 1 million employees in this group meet the duties test for the EAP exemption but earn between the current standard salary threshold ($455 per week) and the proposed threshold ($679 per week); and an additional 201,000 employees in this group meet the HCE duties test for exemption, but not the standard test, and earn at least the current HCE salary threshold ($100,000 per year) but less than the proposed threshold ($147,414 per year)  An additional 3 6 million workers would receive "strengthened" overtime protections, including the following: An additional 2 0 million white collar workers who are paid on a salary basis and earn between the current salary threshold of $455 per week and the proposed threshold of $679 per week but do not meet the EAP duties test (i e , they perform nonexempt work but might be misclassified) would gain overtime protections because their exemption status would not depend on the duties test  In other words, this group of workers would gain overtime coverage because the higher salary threshold would create a clearer line exemption test and reduce misclassification for exemption purposes  About 1 6 million salaried workers in blue collar occupations whose overtime coverage would have been clearer with the higher salary threshold  As DOL notes, this group of workers should currently be covered by overtime provisions but may not be due to worker classification  By comparison, DOL estimated that in the first year under the provisions of the 2016 final rule, approximately 13 1 million workers would have been affected  This total would have included about 4 2 million EAP employees who would have become newly entitled to overtime pay due to the increase in the salary threshold and an additional 8 9 million workers who would have received "strengthened" overtime protections  The data in Table 2 provide a summary of the estimated numbers of affected workers under the 2019 proposed rule and the 2016 final rule 
Report 2:  Specifically, according to USAID, the agency determined that the following statutory requirements discussed in our prior report were not applicable to direct payments to PA creditors  A requirement to notify the Committees on Appropriations 15 days before obligating funds for a cash transfer to the PA A requirement for the PA to maintain cash transfer funds in a separate account A requirement for the President to waive the prohibition on providing funds to the PA and to submit an accompanying report to the Committees on Appropriations A requirement for the Secretary of State to provide a certification and accompanying report to the Committees on Appropriations when the President waives the prohibition on providing funds to the PA Requirements for direct government-to-government assistance, including an assessment of the PA Ministry of Finance and Planning According to USAID officials, they currently do not plan to resume cash payments to the PA, because making direct payments to creditors minimizes the misuse of funds and assures full transparency and appropriateness of transfers  Although USAID concluded that the statutory requirement mandating assessments of the PA Ministry of Finance and Planning did not apply to direct payments to PA creditors, the West Bank and Gaza mission commissioned external assessments of the PA Ministry of Health’s medical referral services and Ministry of Finance and Planning’s petroleum procurement system  According to a USAID document, while the payments to the creditors did not constitute direct budget support to the PA, the agency chose to commission external assessments to determine whether the PA’s financial systems were sufficient to ensure adequate accountability for USAID funds consistent with legislative requirements for direct budget support funds  These external assessments identified weaknesses in both systems  Ministry of Health medical referrals  The assessment report stated that the ministry did not have approved policies and procedures for the medical referral process, a list of medical services covered by the referral system, and written criteria for selecting referral hospitals in the medical referral systems  In response, in a January 2016 internal memorandum, the West Bank and Gaza mission officials concluded, among other things, that the findings did not pose a significant risk to USAID funds  They also stated that the Ministry of Health’s medical referral system had adequate policies and procedures for referrals to local hospitals  However, after the assessment report was issued, a USAID contractor worked with the Ministry of Health to update, revise, and approve guidelines for medical referrals  Ministry of Finance and Planning petroleum procurements  The assessment report stated that the ministry lacked specific policies and procedures to prevent or detect fraud in the petroleum procurement systems  In the West Bank and Gaza mission’s January 2016 memorandum, USAID mission officials disagreed with the assessment’s findings regarding the petroleum procurement system, stating that the assessment did not take into account sufficient and adequate internal controls at the ministry as a first line of defense against fraud  The memorandum also stated that the finding did not affect USAID debt relief payments to the PA creditors  USAID officials told us that, while they did not believe the external assessments’ findings affected the integrity of USAID’s debt relief payment process, they took four additional steps to mitigate findings noted in the assessment of the Ministry of Finance and Planning’s fuel procurement processes  According to USAID officials, they (1) confirmed that the fuel companies had controls and systems to ensure an objective and transparent system in receiving and recording PA orders, (2) dispatched orders with official and properly signed shipping delivery and receipt documents, (3) obtained written confirmation from the fuel companies of the costs of the fuel provided to the PA, and (4) confirmed the PA’s petroleum debt with the fuel companies before initiating the payments and after making the payments  In addition, in 2016, USAID commissioned two routine financial audits of the debt relief grant agreed to by USAID and the PA for the use of fiscal year 2015 ESF assistance to make direct payments to PA creditors  According to USAID officials, the auditors were to examine the PA Ministry of Finance and Planning’s recording of USAID payments to PA creditors in its financial records as well as the ministry’s and USAID’s compliance with the terms of the grant agreement and related implementation letters  The audits did not identify any questioned or ineligible costs, reportable material weaknesses in internal control, or material instances of noncompliance with the terms of the debt relief grant  Also, in 2017, USAID contracted for a financial audit of the fiscal year 2016 debt relief grant agreed to by USAID and the PA  According to a USAID document, in May 2018, USAID held an entrance conference with the PA Ministry of Finance and Planning for the audit of the fiscal year 2016 grant  In July 2018, USAID sent the final audit report to the Regional Inspector General for review  According to the USAID document, the report did not identify any questioned or ineligible costs, reportable material weaknesses in internal controls, or material instances of noncompliance with the terms of the grant  We provided a draft of this report to USAID and State for review and comment  USAID provided comments, which we have reproduced in appendix II, as well as technical comments, which we incorporated as appropriate  State did not provide comments  We are sending copies of this report to the appropriate congressional committees, the Administrator of USAID, and the Secretary of State  In addition, the report is available at no charge on the GAO website at http://www gao gov If you or your staff have any questions about this report, please contact me at (202) 512-3149 or gootnickd@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who contributed to this report are listed in appendix III  Appropriations acts for fiscal years 2015 and 2016 included provisions for GAO to review the treatment, handling, and uses of funds provided through the ESF for assistance to the West Bank and Gaza  This report examines (1) the status of ESF assistance and projects provided to the West Bank and Gaza for fiscal years 2015 and 2016, including payments to PA creditors, and (2) the extent to which USAID conducted required vetting of PA creditors to ensure that assistance would not support entities or individuals associated with terrorism and assessed PA ministries’ capacity to use ESF assistance as intended  To address our first objective, we reviewed appropriations legislation, related budget justification documents, and financial data for fiscal years 2015 and 2016, including expenditures as of March 31, 2018, provided by USAID’s West Bank and Gaza mission in Tel Aviv, Israel  We reviewed data that USAID provided on obligations and expenditures of all ESF assistance for the West Bank and Gaza as of March 31, 2018, from annual allocations for fiscal years 2015 and 2016  We also reviewed relevant USAID documents, including notifications to Congress regarding the use of appropriated funds  In addition, we interviewed USAID and State officials in Washington, D C , and Tel Aviv  To determine whether the data were sufficiently reliable for the purposes of this report, we requested and reviewed information from USAID officials about their procedures for entering contract and financial information into USAID’s data system  We determined that the USAID data were sufficiently reliable  For the project information included in this report, we relied on data that USAID provided, showing its obligations and expenditures of fiscal year 2015 and 2016 ESF assistance for West Bank and Gaza  For illustrative purposes, we requested and obtained from USAID descriptions of projects that, according to USAID officials, represented the largest financial obligations for each development objective in fiscal years 2015 and 2016  To address our second objective, we identified and reviewed relevant legal requirements as well as USAID policies and procedures to comply with those requirements  USAID Mission Order 21 is the primary document that details USAID procedures to ensure that the mission’s assistance program does not provide support to entities or individuals associated with terrorism, consistent with the prohibition on such support found in relevant laws and executive orders  In addition, we reviewed 27 USAID determinations of compliance for payments to PA creditors and discussed with USAID mission officials their efforts to comply with the policies and procedures in Mission Order 21 before executing payments to hospitals, companies, and banks that facilitated the payments  We also reviewed the timing of USAID’s vetting of each PA creditor that received payments, to ensure that, as required by Mission Order 21, the vetting occurred within 12 months before USAID signed the relevant debt relief grant agreement with the PA  Further, we reviewed external assessments of the PA Ministries of Health and Finance and Planning and financial audits of the PA Ministry of Finance and Planning, and we discussed the assessments’ and audits with USAID officials responsible for payments to PA creditors  We conducted this performance audit from September 2017 to August 2018, in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for findings and conclusions based on our audit objectives  In addition to the contact named above, Judith McCloskey (Assistant Director), Tom Zingale (Analyst-in-Charge), Eddie Uyekawa, Jeff Isaacs, and Nicole Willems made significant contributions to this report  David Dornisch, Neil Doherty, Reid Lowe, and Roger Stoltz also contributed to the report 

ground_truth: Strong relations between the United States and Israel have led to bilateral cooperation in many areas. Matters of particular significance to U.S.-Israel relations include Israel's ability to address the threats it faces in its region. Shared U.S.-Israel concerns about Iran and its allies on the nuclear issue and in Syria and Lebanon. Israeli-Palestinian issues. Israeli domestic political issues, including elections scheduled for 2019. Israel relies on a number of strengths to manage potential threats to its security and existence. It maintains conventional military superiority relative to neighboring states and the Palestinians. It also takes measures to deter attack and defend its population and borders from evolving asymmetric threats such as rockets and missiles, cross-border tunneling, drones, and cyberattacks. Additionally, Israel has an undeclared but presumed nuclear weapons capability. Against a backdrop of strong bilateral cooperation, Israel's leaders and supporters routinely make the case that Israel's security and the broader stability of the region remain critically important for U.S. interests. A 10-year bilateral military aid memorandum of understanding (MOU)—signed in 2016—commits the United States to provide Israel $3.3 billion in Foreign Military Financing annually from FY2019 to FY2028, along with additional amounts from Defense Department accounts for missile defense. All of these amounts remain subject to congressional appropriations. Israeli officials seek to counter Iranian regional influence and prevent Iran from acquiring nuclear weapons. Prime Minister Binyamin Netanyahu released new Israeli intelligence on Iran's nuclear program in April 2018, days before President Trump announced the U.S. withdrawal from the 2015 international agreement that constrains Iran's nuclear activities. It is unclear whether Israel might take future military action in Iran if Iranian nuclear activities resume. Since 2018, Israel has conducted a number of military operations in Syria against Iran and its allies, including Lebanese Hezbollah. Israel and Iran also appear to be competing for military advantage over each other at the Israel-Lebanon border. Amid uncertainty in the area, in March 2019 President Trump recognized Israel's claim to sovereignty over the Golan Heights, changing long-standing U.S. policy that held—in line with U.N. Security Council Resolution 497 from 1981—the Golan was occupied Syrian territory whose final status was subject to Israel-Syria negotiation. The prospects for an Israeli-Palestinian peace process are complicated by many factors. Palestinian leaders cut off high-level political contacts with the Trump Administration after it recognized Jerusalem as Israel's capital in December 2017. U.S.-Palestinian tensions have since worsened amid U.S. cutoffs of funding to the Palestinians and diplomatic moves—including the May 2018 opening of the U.S. embassy to Israel in Jerusalem. Palestinian leaders interpreted these actions as prejudicing their claims to a capital in Jerusalem and to a just resolution of Palestinian refugee claims. Israeli Prime Minister Netanyahu has welcomed these U.S. actions. The Trump Administration has suggested that it will release a proposed peace plan after Israeli elections, which are scheduled for April 9, 2019. Speculation continues about how warming ties between Israel and Arab Gulf states may affect Israeli-Palestinian diplomacy, though Saudi Arabia said that the U.S. policy change on the Golan Heights would negatively affect the peace process. Bouts of tension and violence between Israel and Hamas in Gaza have continued—reportedly accompanied by indirect talks between the two parties that are being brokered by Egypt and aim for a long-term cease-fire. Domestically, Israel is preparing for the April 9 elections, which are closely contested. Former top general Benny Gantz is combining with former Finance Minister Yair Lapid to challenge Netanyahu, whom the attorney general has recommended be indicted for corruption in three separate cases. The elections and subsequent government formation process will have significant implications for Israel's future leadership and policies.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: Strong relations between the United States and Israel have led to bilateral cooperation in many areas  Matters of particular significance include the following: Israel's own capabilities for addressing threats, and its cooperation with the United States  Shared U S -Israel concerns about Iran, within the context of the U S  exit from the 2015 international nuclear agreement, and growing tension involving Iran and Hezbollah at Israel's northern border with Syria and Lebanon  Israeli-Palestinian issues, including those involving Jerusalem, Hamas and the Gaza Strip, funding for Palestinians, and a possible Trump Administration peace plan  Israeli domestic political issues, including probable corruption-related indictments against Prime Minister Binyamin Netanyahu and closely contested elections that are scheduled for April 9, 2019  For background information and analysis on these and other topics, including aid, arms sales, and missile defense cooperation, see CRS Report RL33476, Israel: Background and U S  Relations , by Jim Zanotti; and CRS Report RL33222, U S  Foreign Aid to Israel , by Jeremy M  Sharp  Israel relies on a number of strengths to manage potential threats to its security and existence  These strengths include robust military and homeland security capabilities, as well as close cooperation with the United States  Israel maintains conventional military superiority relative to its neighbors and the Palestinians  Shifts in regional order and evolving asymmetric threats during this decade have led Israel to update its efforts to project military strength, deter attack, and defend its population and borders  Israel appears to have reduced some unconventional threats via missile defense systems, reported cyber defense and warfare capabilities, and other heightened security measures  Israel has a robust homeland security system featuring sophisticated early warning practices and thorough border and airport security controls; most of the country's buildings have reinforced rooms or shelters engineered to withstand explosions  Israel also has proposed and partially constructed a national border fence network of steel barricades (accompanied at various points by watch towers, patrol roads, intelligence centers, and military brigades) designed to minimize militant infiltration, illegal immigration, and smuggling from Egypt, Syria, Lebanon, Jordan, and the Gaza Strip  Additionally, Israeli authorities have built a separation barrier in and around parts of the West Bank  Israel is not a party to the Nuclear Nonproliferation Treaty (NPT) and maintains a policy of "nuclear opacity" or amimut   A 2017 report estimated that Israel possesses a nuclear arsenal of around 80-85 warheads  The United States has countenanced Israel's nuclear ambiguity since 1969, when Israeli Prime Minister Golda Meir and U S  President Richard Nixon reportedly reached an accord whereby both sides agreed never to acknowledge Israel's nuclear arsenal in public  Israel might have nuclear weapons deployable via aircraft, submarine, and ground-based missiles  No other Middle Eastern country is generally thought to possess nuclear weapons  Israeli officials closely consult with U S  counterparts in an effort to influence U S  decisionmaking on key regional issues, and U S  law requires the executive branch to take certain actions to preserve Israel's "qualitative military edge," or QME  Additionally, a 10-year bilateral military aid memorandum of understanding (MOU)—signed in 2016—commits the United States to provide Israel $3 3 billion in Foreign Military Financing and to spend $500 million annually on joint missile defense programs from FY2019 to FY2028, subject to congressional appropriations  Israel's leaders and supporters routinely make the case that Israel's security and the broader stability of the region remain critically important for U S  interests  They also argue that Israel is a valuable U S  ally  The United States and Israel do not have a mutual defense treaty or agreement that provides formal U S  security guarantees  Iran remains of primary concern to Israeli officials largely because of (1) Iran's antipathy toward Israel, (2) Iran's broad regional influence, and (3) the probability that some constraints on Iran's nuclear program could loosen in the future  In recent years, Israel and Arab Gulf states have discreetly cultivated closer relations with one another in efforts to counter Iran  Prime Minister Netanyahu has sought to influence U S  decisions on the international agreement on Iran's nuclear program (known as the Joint Comprehensive Plan of Action, or JCPOA)  He argued against the JCPOA when it was negotiated in 2015—including in a speech to a joint session of Congress—and welcomed President Trump's May 2018 withdrawal of the United States from the JCPOA and accompanying reimposition of U S  sanctions on Iran's core economic sectors  A few days before President Trump's May announcement, Netanyahu presented information that Israeli intelligence operatives apparently seized in early 2018 from an Iranian archive  He used the information to question Iran's credibility and highlight its potential to parlay existing know-how into nuclear-weapons breakthroughs after the JCPOA expires  In his September 2018 speech before the U N  General Assembly, Netanyahu claimed that Iran maintains a secret "atomic warehouse for storing massive amounts of equipment and materiel " An unnamed U S  intelligence official was quoted as saying in response, "so far as anyone knows, there is nothing in [the facility Netanyahu identified] that would allow Iran to break out of the JCPOA any faster than it otherwise could " After Netanyahu publicly exposed the Iranian nuclear archive, some former Israeli officials speculated about what action Israel might consider taking against Iranian nuclear facilities if Iran abrogates the JCPOA and expands nuclear activities currently restricted under the agreement  However, Netanyahu had said in an interview that he was not seeking a military confrontation with Iran  Israel and Iran have engaged in hostile action over Iran's presence in Syria  In the early years of the Syria conflict, Israel primarily employed air strikes to prevent Iranian weapons shipments destined for the Iran-backed group Hezbollah in Lebanon  Later, as the Syrian government regained control of large portions of the country with Iranian backing, Israeli leaders began pledging to prevent Iran from constructing and operating bases or advanced weapons manufacturing facilities in Syria  Since 2018, Israeli and Iranian forces have repeatedly targeted one another in and over Syrian- and Israeli-controlled areas  In January 2019, Prime Minister Netanyahu said that Israel had targeted Iranian and Hezbollah targets in Syria "hundreds of times " Limited Israeli strikes to enforce "redlines" against Iran-backed forces could expand into wider conflict, particularly if there is a miscalculation by one or both sides  U S  involvement in Syria could be one factor in Israeli calculations on this issue  The U S  base at Al Tanf in southern Syria has reportedly "served as a bulwark against Iran's efforts to create a land route for weapons from Iran to Lebanon " Israeli officials favor continued U S  involvement in Syria, while also preparing for the possibility that they may need to take greater direct responsibility for countering Iran there  Russia's advanced air defense systems in Syria could make it more difficult for Israel to operate there  Since 2015, Russia has operated an S-400 system at Russia's Khmeimim air base in Lattakia, a city on Syria's Mediterranean coast  To date, however, Russia does not appear to have acted militarily to thwart Israeli air strikes against Iranian or Syrian targets, and Israel and Russia maintain communications aimed at deconflicting their operations  In addition to the S-400 that it owns and operates, Russia delivered an S-300 air defense system for Syria's military to Khmeimim airbase in October 2018  The delivery followed Syria's downing of a Russian military surveillance plane in September 2018 under disputed circumstances, shortly after an Israeli operation in the vicinity  According to an Israeli satellite imagery analysis company, three launchers appeared to be operational as of February 2019  It is unclear to what extent Russia has transferred the S-300 to Syrian military control, and how this might affect future Israeli military action in Syria  An Israeli journalist wrote that "Israel has the knowledge, experience and equipment to evade the S-300, but the fact that additional batteries, manned by Russian personnel, are on the ground, will necessitate greater care [when carrying out future operations against Iran-aligned targets in Syria] " Since the September 2018 incident, Israeli air strikes appear to have decreased somewhat  On March 25, 2019, President Trump signed a proclamation stating that the United States recognizes the Golan Heights (hereinafter, the Golan) to be part of the State of Israel  The proclamation stated that "any possible future peace agreement in the region must account for Israel's need to protect itself from Syria and other regional threats" —presumably including threats from Iran and the Iran-backed Lebanese group Hezbollah  Israel gained control of the Golan from Syria during the 1967 Arab-Israeli war, and effectively annexed it unilaterally by applying Israeli law to the region in 1981 (see Figure 2 )  President Trump's proclamation changed long-standing U S  policy on the Golan  Since 1967, successive U S  Administrations supported the general international stance that the Golan is Syrian territory occupied by Israel, with its final status subject to negotiation  In reaction to the U S  proclamation, others in the international community have insisted that the Golan's status has not changed  In Congress, Senate and House bills introduced in February 2019 ( S  567 and H R  1372 ) support Israeli sovereignty claims to the Golan, and would treat the Golan as part of Israel in any existing or future law "relating to appropriations or foreign commerce " For decades after 1967, various Israeli leaders, reportedly including Prime Minister Netanyahu as late as 2011, had entered into indirect talks with Syria aimed at returning some portion of the Golan as part of a lasting peace agreement  However, the effect of civil war on Syria and the surrounding region, including an increase in Iran's presence, may have influenced Netanyahu to shift focus from negotiating with Syria on a "land for peace" basis to obtaining international support for Israel's claims of sovereignty  As part of the periodic conflict in Syria between Israel and Iran , some Iranian missiles have targeted Israeli positions in the Golan  The Syrian government has denounced the U S  policy change as an illegal violation of Syrian sovereignty and territorial integrity, and insisted that Syria is determined to recover the Golan  Additionally, observers have argued that the policy change could unintentionally bolster Syrian President Bashar al Asad within Syria by rallying Syrian nationalistic sentiment in opposition to Israel's claims to the Golan and deflecting attention from Iran's activities inside Syria  Since 1974, the U N  Disengagement Observer Force (UNDOF) has patrolled an area of the Golan Heights between the regions controlled by Israel and Syria, with about 880 troops from five countries stationed there as of January 2019  During that time, Israel's forces in the Golan have not faced serious military resistance to their continued deployment, despite some security threats and diplomatic challenges  Periodic resolutions by the U N  General Assembly have criticized Israel's occupation as hindering regional peace and Israel's settlement and de facto annexation of the Golan as illegal  Hezbollah's forces and Israel's military have sporadically clashed near the Lebanese border for decades—with the antagonism at times contained in the border area, and at times escalating into broader conflict  Speculation persists about the potential for wider conflict and its regional implications  Israeli officials have sought to draw attention to Hezbollah's buildup of mostly Iran-supplied weapons—including reported upgrades to the range, precision, and power of its projectiles—and its alleged use of Lebanese civilian areas as strongholds  Ongoing tension between Israel and Iran over Iran's presence in Syria raises questions about the potential for Hezbollah's forces in Lebanon to open another front against Israel  After the September 2018 incident leading to Russia's installation of an S-300 system in Syria (discussed above), Iran reportedly began directly transferring weapons to Hezbollah in Lebanon while reducing Syria's use as a transshipment hub  One Israeli media account warned that Hezbollah's threat to Israel is increasing because of initiatives to build precision-weapons factories in Lebanon and to set up a military infrastructure in southern Syria  In late 2018 and early 2019, Israel's military undertook an effort—dubbed "Operation Northern Shield"—to seal six Hezbollah attack tunnels to prevent them from crossing into Israel  Israeli officials claim that they do not want another war, while at the same time taking measures aimed at constraining and deterring Hezbollah, including through consultation with the U N  Interim Force in Lebanon (UNIFIL)  President Trump has expressed interest in brokering a final-status Israeli-Palestinian agreement, and his Administration has supposedly prepared a proposal to facilitate negotiations, but the Administration has repeatedly postponed releasing the proposal  Many factors may account for the delays, including recent U S  actions regarding Jerusalem, tension in and around the Gaza Strip, reduced funding for the Palestinians, Israeli settlements in the West Bank, and political jockeying and domestic constraints among Israelis and Palestinians  The U S  decision—announced in December 2017—to recognize Jerusalem as Israel's capital and move the U S  embassy there has fed U S -Palestinian tensions  Israeli leaders generally celebrated the change, but Palestine Liberation Organization (PLO) Chairman and Palestinian Authority (PA) President Mahmoud Abbas strongly objected  Many other countries opposed President Trump's actions on Jerusalem, as reflected in action at the United Nations  Claiming U S  bias favoring Israel, Palestinian leaders broke off high-level political contacts with the United States shortly after the December 2017 announcement and have made efforts to advance Palestinian national claims in international fora  However, the PA continues security coordination with Israel in the West Bank  U S -Palestinian tensions appear to have influenced Administration decisions to cut off various types of U S  funding to the Palestinians, and arguably have dimmed prospects for restarting Israeli-Palestinian talks  In a September 2018 address before the U N  General Assembly, PLO Chairman/PA President Abbas denounced Administration actions that he characterized as taking disputed Israeli-Palestinian issues—such as Jerusalem's status and Palestinian refugee claims—off the negotiating table  Funding for economic and humanitarian needs in the West Bank and Gaza could become even scarcer  In February 2019, Israel announced that it would withhold a portion of the tax revenue it collects for the PA because—pursuant to a law passed by the Knesset in 2018—Israel had determined that amount represented PLO/PA payments made on behalf of individuals allegedly involved in terrorist acts  In response, Abbas announced that the PA would completely reject monthly revenue transfers from Israel if it withheld any amount, even though the transfers comprise approximately 65% of the PA budget  For February, Israel withheld approximately $11 million from the $193 million due to the PA, with the PA rejecting the entire amount as a result  The PA is reportedly seeking temporary financial support from the private sector and local banks, and also asking the Arab League to follow through on its 2010 decision to provide $100 million per month as a "financial safety net" for the PA  At the end of January 2019, U S  bilateral aid to the Palestinians—including nonlethal security assistance that Israel generally supports—ended completely due to the Anti-Terrorism Clarification Act (ATCA, P L  115-253 ), which became law on October 3, 2018  Two months after the law's enactment, PA Prime Minister Rami Hamdallah informed Secretary of State Michael Pompeo that the PA would not accept aid that subjected it to federal court jurisdiction  Apparently, U S  aid will not resume unless Congress amends or repeals the ATCA, or the Administration channels the aid differently  Assistant to the President and Senior Advisor Jared Kushner has stated that the Administration will publicly release a peace plan sometime after Israeli national elections, which are set to occur on April 9, 2019  According to Kushner, the peace plan contains detailed proposals on the various issues that divide Israel and the PLO  Many observers express skepticism about the prospect that these proposals can serve as a basis for the serious resumption of bilateral talks, but Kushner has reportedly said that the Administration is focusing on formulating "realistic solutions," and that "privately, people are more flexible " U S  officials hope to surmount potential obstacles to the peace plan in the Israeli and Palestinian domestic arenas by obtaining political and economic support for the U S  initiative from key Arab states in the region, including Saudi Arabia, the United Arab Emirates, Jordan, and Egypt  A number of Arab states share common interests in working behind the scenes with Israel to counter Iranian regional influence  While some diplomatic developments have fed speculation about warming Arab-Israeli ties, reports suggest that key Arab Gulf states remain reluctant to embrace more formal relations with Israel without a resolution of the Palestinian issue  Saudi Arabia's press agency responded to the U S  recognition of Israel's claims to sovereignty in the Golan Heights by saying that it "will have significant negative effects on the peace process in the Middle East and the security and stability of the region " In a statement with implications both for domestic and international audiences, Prime Minister Netanyahu reportedly said that the March 2019 change in U S  policy on the Golan proves that countries can retain territory captured in a defensive war  His statement prompted speculation over the possibility that Israeli leaders might consider annexing part of the West Bank and whether the situation in the Golan is sufficiently similar to invite comparison  Days before the April elections, Netanyahu asserted that if he were to lead the next government, he would apply Israeli law to West Bank settlements  The closely contested Israeli national elections—scheduled for April 9, 2019—and the subsequent government formation process will have significant implications for the country's leadership and future policies  Prime Minister Netanyahu faces a challenge from the centrist Blue and White party under the combined leadership of former top general Benny Gantz and former Finance Minister Yair Lapid  Some setbacks for Netanyahu during the campaign have included the attorney general's announcement of probable corruption-related indictments against Netanyahu, new media allegations of possible misconduct relating to Israel's procurement of German submarines, and questions about some individuals or groups possibly spreading rumors against Netanyahu's opponents via social media  Yet, some observers calculate that Netanyahu's Likud could possibly get fewer Knesset seats than Blue and White and still form the next coalition  For more information on the actors involved in the elections, see CRS Insight IN11068, Israel: April 2019 Elections and Probable Indictments Against Prime Minister Netanyahu , by Jim Zanotti and this report's Appendix   In July 2018, the Knesset passed a Basic Law defining Israel as the national homeland of the Jewish people  Some observers have expressed concern that the law might further undermine the place of Arabs in Israeli society, while others view its effect as mainly symbolic  In March 2019, Netanyahu said that Israel is a Jewish, democratic state with equal rights for all its citizens, and "the nation-state not of all its citizens, but only of the Jewish people," reviving domestic debate about the 2018 law and perhaps seeking support during the election campaign from sympathetic voter groups 


Report 2:  Specifically, according to USAID, the agency determined that the following statutory requirements discussed in our prior report were not applicable to direct payments to PA creditors  A requirement to notify the Committees on Appropriations 15 days before obligating funds for a cash transfer to the PA A requirement for the PA to maintain cash transfer funds in a separate account A requirement for the President to waive the prohibition on providing funds to the PA and to submit an accompanying report to the Committees on Appropriations A requirement for the Secretary of State to provide a certification and accompanying report to the Committees on Appropriations when the President waives the prohibition on providing funds to the PA Requirements for direct government-to-government assistance, including an assessment of the PA Ministry of Finance and Planning According to USAID officials, they currently do not plan to resume cash payments to the PA, because making direct payments to creditors minimizes the misuse of funds and assures full transparency and appropriateness of transfers  Although USAID concluded that the statutory requirement mandating assessments of the PA Ministry of Finance and Planning did not apply to direct payments to PA creditors, the West Bank and Gaza mission commissioned external assessments of the PA Ministry of Health’s medical referral services and Ministry of Finance and Planning’s petroleum procurement system  According to a USAID document, while the payments to the creditors did not constitute direct budget support to the PA, the agency chose to commission external assessments to determine whether the PA’s financial systems were sufficient to ensure adequate accountability for USAID funds consistent with legislative requirements for direct budget support funds  These external assessments identified weaknesses in both systems  Ministry of Health medical referrals  The assessment report stated that the ministry did not have approved policies and procedures for the medical referral process, a list of medical services covered by the referral system, and written criteria for selecting referral hospitals in the medical referral systems  In response, in a January 2016 internal memorandum, the West Bank and Gaza mission officials concluded, among other things, that the findings did not pose a significant risk to USAID funds  They also stated that the Ministry of Health’s medical referral system had adequate policies and procedures for referrals to local hospitals  However, after the assessment report was issued, a USAID contractor worked with the Ministry of Health to update, revise, and approve guidelines for medical referrals  Ministry of Finance and Planning petroleum procurements  The assessment report stated that the ministry lacked specific policies and procedures to prevent or detect fraud in the petroleum procurement systems  In the West Bank and Gaza mission’s January 2016 memorandum, USAID mission officials disagreed with the assessment’s findings regarding the petroleum procurement system, stating that the assessment did not take into account sufficient and adequate internal controls at the ministry as a first line of defense against fraud  The memorandum also stated that the finding did not affect USAID debt relief payments to the PA creditors  USAID officials told us that, while they did not believe the external assessments’ findings affected the integrity of USAID’s debt relief payment process, they took four additional steps to mitigate findings noted in the assessment of the Ministry of Finance and Planning’s fuel procurement processes  According to USAID officials, they (1) confirmed that the fuel companies had controls and systems to ensure an objective and transparent system in receiving and recording PA orders, (2) dispatched orders with official and properly signed shipping delivery and receipt documents, (3) obtained written confirmation from the fuel companies of the costs of the fuel provided to the PA, and (4) confirmed the PA’s petroleum debt with the fuel companies before initiating the payments and after making the payments  In addition, in 2016, USAID commissioned two routine financial audits of the debt relief grant agreed to by USAID and the PA for the use of fiscal year 2015 ESF assistance to make direct payments to PA creditors  According to USAID officials, the auditors were to examine the PA Ministry of Finance and Planning’s recording of USAID payments to PA creditors in its financial records as well as the ministry’s and USAID’s compliance with the terms of the grant agreement and related implementation letters  The audits did not identify any questioned or ineligible costs, reportable material weaknesses in internal control, or material instances of noncompliance with the terms of the debt relief grant  Also, in 2017, USAID contracted for a financial audit of the fiscal year 2016 debt relief grant agreed to by USAID and the PA  According to a USAID document, in May 2018, USAID held an entrance conference with the PA Ministry of Finance and Planning for the audit of the fiscal year 2016 grant  In July 2018, USAID sent the final audit report to the Regional Inspector General for review  According to the USAID document, the report did not identify any questioned or ineligible costs, reportable material weaknesses in internal controls, or material instances of noncompliance with the terms of the grant  We provided a draft of this report to USAID and State for review and comment  USAID provided comments, which we have reproduced in appendix II, as well as technical comments, which we incorporated as appropriate  State did not provide comments  We are sending copies of this report to the appropriate congressional committees, the Administrator of USAID, and the Secretary of State  In addition, the report is available at no charge on the GAO website at http://www gao gov If you or your staff have any questions about this report, please contact me at (202) 512-3149 or gootnickd@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who contributed to this report are listed in appendix III  Appropriations acts for fiscal years 2015 and 2016 included provisions for GAO to review the treatment, handling, and uses of funds provided through the ESF for assistance to the West Bank and Gaza  This report examines (1) the status of ESF assistance and projects provided to the West Bank and Gaza for fiscal years 2015 and 2016, including payments to PA creditors, and (2) the extent to which USAID conducted required vetting of PA creditors to ensure that assistance would not support entities or individuals associated with terrorism and assessed PA ministries’ capacity to use ESF assistance as intended  To address our first objective, we reviewed appropriations legislation, related budget justification documents, and financial data for fiscal years 2015 and 2016, including expenditures as of March 31, 2018, provided by USAID’s West Bank and Gaza mission in Tel Aviv, Israel  We reviewed data that USAID provided on obligations and expenditures of all ESF assistance for the West Bank and Gaza as of March 31, 2018, from annual allocations for fiscal years 2015 and 2016  We also reviewed relevant USAID documents, including notifications to Congress regarding the use of appropriated funds  In addition, we interviewed USAID and State officials in Washington, D C , and Tel Aviv  To determine whether the data were sufficiently reliable for the purposes of this report, we requested and reviewed information from USAID officials about their procedures for entering contract and financial information into USAID’s data system  We determined that the USAID data were sufficiently reliable  For the project information included in this report, we relied on data that USAID provided, showing its obligations and expenditures of fiscal year 2015 and 2016 ESF assistance for West Bank and Gaza  For illustrative purposes, we requested and obtained from USAID descriptions of projects that, according to USAID officials, represented the largest financial obligations for each development objective in fiscal years 2015 and 2016  To address our second objective, we identified and reviewed relevant legal requirements as well as USAID policies and procedures to comply with those requirements  USAID Mission Order 21 is the primary document that details USAID procedures to ensure that the mission’s assistance program does not provide support to entities or individuals associated with terrorism, consistent with the prohibition on such support found in relevant laws and executive orders  In addition, we reviewed 27 USAID determinations of compliance for payments to PA creditors and discussed with USAID mission officials their efforts to comply with the policies and procedures in Mission Order 21 before executing payments to hospitals, companies, and banks that facilitated the payments  We also reviewed the timing of USAID’s vetting of each PA creditor that received payments, to ensure that, as required by Mission Order 21, the vetting occurred within 12 months before USAID signed the relevant debt relief grant agreement with the PA  Further, we reviewed external assessments of the PA Ministries of Health and Finance and Planning and financial audits of the PA Ministry of Finance and Planning, and we discussed the assessments’ and audits with USAID officials responsible for payments to PA creditors  We conducted this performance audit from September 2017 to August 2018, in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for findings and conclusions based on our audit objectives  In addition to the contact named above, Judith McCloskey (Assistant Director), Tom Zingale (Analyst-in-Charge), Eddie Uyekawa, Jeff Isaacs, and Nicole Willems made significant contributions to this report  David Dornisch, Neil Doherty, Reid Lowe, and Roger Stoltz also contributed to the report 

ground_truth: The Fair Labor Standards Act (FLSA), enacted in 1938, is the main federal law that establishes general wage and hour standards for most, but not all, private and public sector employees. Among other protections, the FLSA establishes that covered nonexempt employees must be compensated at one-and-a-half times their regular rate of pay for each hour worked over 40 hours in a workweek. The FLSA also establishes certain exemptions from its general labor market standards. One of the major exemptions to the overtime provisions in the FLSA is for bona fide "executive, administrative, and professional" employees (the "EAP" or "white collar" exemptions). The FLSA grants authority to the Secretary of Labor to define and delimit the EAP exemption "from time to time." To qualify for this exemption from the FLSA's overtime pay requirement, an employee must be salaried (the "salary basis" test); perform specified executive, administrative, or professional duties (the "duties" test); and earn above an established salary level threshold (the "salary level" test). In March 2019, the Secretary of Labor published a Notice of Proposed Rulemaking (NPRM) to make changes to the EAP exemptions. The 2019 proposed rule would become effective around January 2020. The major changes in the 2019 proposed rule include increasing the standard salary level threshold from the previous level of $455 per week to $679 per week and committing the Department of Labor (DOL) to updating the EAP exemptions every four years through the rulemaking process. The 2019 proposed rule does not change the duties and responsibilities that employees must perform to be exempt. Thus, the 2019 proposed rule would affect EAP employees at salary levels between $455 and $679 per week in 2020. DOL estimates that about 4.9 million workers would be affected in the first year, including about 1.3 million EAP employees who would become newly entitled to overtime pay and an additional 3.6 million workers who would have overtime protection clarified and thereby strengthened. This report answers frequently asked questions about the overtime provisions of the FLSA, the EAP exemptions, and the 2019 proposed rule that would define and delimit the EAP exemptions.