the Vice Chair serves as a coordinator and liaison for ECIE members in dealings with OMB,
Congress, and the PCIE.

Specific activities, which required considerable resource use during the reporting period, included
coordinating monthly ECIE meetings; conducting committee meetings; transmitting IG related
information to all members; correlating and summarizing ECIE positions on various issues;
representing ECIE members’ interests; briefing OMB and Congressional staff;, coordinating
project activity, annual reports, and training conferences; and representing ECIE at PCIE
meetings.

The ECIE Vice Chair responsibilities and workload, although considered of the highest
importance by the ARC OIG, required a substantial expenditure of time and resources in order
to address member issues and ensure ECIE actions in line with the Executive Order. The normal
workload attributable to coordinating and addressing interests and concerns of member entities
was increased by the inherent activity and concerns resulting from a change in Administration.
Consequently, ARC OIG time was diffused between ECIE and ARC activities during this
reporting period; and the OIG appreciates the support of ARC management with respect to the
IG's involvement as the ECIE Vice Chair.

The Inspector General continues to advocate use of Interservice Agreements by smaller
designated IG offices in order to substantially reduce the costs of independently contracting for
external auditors. This process, which was initiated by the ARC OIG in 1989, is now used by
approximately ten designated IG offices and results in a substantial reduction in costs with
Tespect to advertising and bid evaluation, without any reduction in competition or quality of
work.


PURPOSE AND REQUIREMENTS OF THE

OFFICE OF INSPECTOR GENERAL SEMIANNUAL REPORT

The Inspector General Act of 1978 requires the Inspector General to keep the Federal Co-
Chairman and Congress fully and currently informed about problems and deficiencies in the
Commission's operations and the necessity for corrective action. In addition, the Act specifies
that semiannual reports will be provided to the Chairman by April 30 and October 31 and to
Congress 30 days later.

The Co-Chairman may transmit comments to Congress along with the report but may not change

any part of the report. The specific requirements prescribed in the Act, as amended (Public Law
100-504), are listed below.

Reporting’ Reaui

Section 4(a)(2) Review of legislation and regulations Page 7

Section 5(a)(1) Problems, abuses, and deficiencies Page 3

Section 5(a)(2) Recommendations with respect to problems, abuses, and Page 3
deficiencies

Section 5(a)(3) Prior significant recommendations not yet implemented *

Section 5(a)(4) Matters referred to prosecutive authorities *

Section 5(a)(5) Summary of instances where information was refused ba

and 6(b)(2)

Section 5(a)(6) Listing of audit reports showing number of reports and App A
dollar value of questioned costs

Section 5(a)(7) Summary of each particularly significant report il

Section 5(a)(8) Statistical table showing number of reports and dollar value App B

of questioned costs

Section 5(a)(9) Statistical table showing number of reports and dollar value App C
of recommendations that funds be put to better use

Section 5(a)(10) Summary of each audit issued before this reporting period
for which no management decision was made by end of

the reporting period

Section 5(a)(11) Significant revised management decisions

iii


APPENDIX D

DEFINITIONS OF TERMS USED

The following definitions apply to terms used in reporting audit statistics:

Questioned Cost

Unsupported Cost

Disallowed Cost

Funds Be Put To Better Use

Management Decision

Final Action

A cost which the Office of Inspector General (OIG)
questioned because of an alleged violation of a provision of
a law, regulation, contract, or other agreement or document
governing the expenditure of funds; such cost is not
supported by adequate documentation; or the expenditure of
funds for the intended purpose is unnecessary or
unreasonable.

A cost which the OIG questioned because the cost was not
supported by adequate documentation at the time of the
audit.

A questioned cost that management, in a management
decision, has sustained or agreed should not be charged to
the Commission.

A recommendation made by the OIG that funds could be
used more efficiently if management took actions to
implement and complete the recommendation.

Management's evaluation of the findings and
recommendations included in the audit report and the
issuance of a final decision by management concerning its
response to such findings and recommendations, including
actions concluded to be necessary. Interim decisions and
actions are not considered final management decisions for
the purpose of the tables in this report.

The completion of all management actions that are
described in a management decision with respect to audit
findings and recommendations. If management concluded
that no actions were necessary, final action occurs when a
management decision is issued.


program provisions. Coordination has been maintained with other OIGs, especially on the issue
of lease and purchase arrangements by local development districts (LDDs).

The ARC OIG will continue to address these issues, including periodic followup on the extent
of actions initiated and results obtained, and, as noted below, will report on issues needing
continued attention.

oO

Continued emphasis has been placed on testing first-time program participants in
order to determine and evaluate the extent of knowledge and understanding of
program procedures and requirements. Our tests disclosed that these grantees
often did not have adequate financial systems or accounting controls and, thus,
were unable to fully support claims for reimbursement and/or submitted ineligible
costs for reimbursement. Of particular significance was limited understandings
with respect to information necessary to support required matching contributions
and allocation of costs between different funding sources and allowable costs as
noted in the applicable OMB Circulars (A-87 and A-122). For example, we
questioned most of the costs associated with a $50,000 grant because of the
absence of supporting documentation for expenses, in-kind contributions, or
matching funds. Also, the grantee did not maintain a separate account identifying
ARC funds; and total expenditures applicable to the grant could not be
determined. In 5 other instances, we questioned approximately $39,000. Also,
in several other cases, we worked with the grantee to identify eligible costs prior
to the issuance of our final report and, thus, reduced or eliminated questioned
costs necessitating additional audit resolution. Recommendations to improve
financial and accounting systems and controls were directed at grantees and
discussions were held with ARC about providing increased guidance to new or
smaller grantees, including provision of applicable OMB Circulars and ARC
regulations at the time of grant approval.

Tests at four grantees disclosed a need for action to close the grant, adjust
payments, deobligate or recover funds, and/or protect the Government's interest.
In one instance, $64,242 could be deobligated since the project had been
completed; in another instance, $7,000 in unused funds could be deobligated; in
2 cases, excess cash approximating $98,000 could be returned; in one instance,
equipment valued at about $3,800 could be retumed or used for other purposes
and the Government's interest in a $58,000 van needed to be better protected.

A program survey of controls over grants with expired performance periods
disclosed continuing management action to review and close, where appropriate,
expired grants. We noted the potential for additional action, including
deobligation of unused or unnecessary funds. Our review included 111 grants
valued at $10,641,980 and unused balances of $3,036,534, with emphasis on 61
grants for which the performance period had been expired for at least 6 months.
Test results disclosed 19 instances where the performance period had expired
without any fund drawdowns, 36 instances where the performance period had been
expired for more than 1 year, and 25 instances where the performance period had
been expired for more than 6 months. We identified $2,002,684 as having
potential for deobligation. Management action on these cases to date has included

4


I. INTRODUCTION

The Inspector General Act Amendments of 1988 (P.L. 100-504) provided for the establishment
of an Office of Inspector General at 32 designated Federal entities, including the ARC. The
Appalachian Regional Commission (ARC) Office of Inspector General became operational on
October 1, 1989, with the appointment of an Inspector General and provision of budgetary
authority for contracted audit and/or investigation activities.

i. BACKGROUND
A. APPALACHIAN REGIONAL COMMISSION

The ARC was established by the Appalachian Regional Development Act of 1965 (P.L. 89-4).
The Act authorizes a Federal/State partnership designed to promote long-term economic
development on a coordinated regional basis in the 13 Appalachian States. The Commission
represents a unique experiment in partnership among the Federal, State, and local levels of
Government and between the public and private sectors. It is composed of the Governors of the
13 Appalachian States and a Federal representative who is appointed by the President. The
Federal representative serves as the Federal Co-Chairman with the Governors electing one of
their number to serve as the States' Co-Chairman.

to) Through joint planning and development of regional priorities, ARC funds are
used to assist and encourage other public and private resources to address
Appalachia's unique needs. Program direction and policy is established by the
Commission (ARC Code) by the vote of a majority of the State members and the
affirmative vote of the Federal Co-Chairman. Emphasis has been placed on
highways, infrastructure development, business enterprise, and human resources
programs.

fe) Administratively, the Office of the Federal Co-Chairman, with a staff of 11, and
the Commission, with a staff of 50, are responsible for ARC operations. The
States maintain an Office of States' Representative (3 persons) that has primarily
liaison responsibilities. All personnel are located in Washington, DC. The
Commission staff's administrative expenses, including salaries, are funded jointly
by Federal and State funds; the States' Representative staff is funded entirely by
the States; and the Federal Office staff is funded entirely from Federal funds.

° The Commission's appropriation for FY 1994 was $249 million, which is divided
approximately $160 million for highway projects, $85.6 million for non—highway
projects, and $3.4 million for administrative expenses. The FY 1995 appropriation
is for $282 million. ARC is authorized through its current appropriation.

° Program funds are distributed to State and local entities in line with an allocation
formula intended to provide fair and reasonable distribution of available resources.
ARC staff have responsibilities for program development, policy analysis and
review, grant development, technical assistance to States, and management and
oversight.


Section 5(a)(12) Significant management decisions with which the Inspector a
General disagrees

* None.

+f See references to Sections 5(a)(1) and 5(a)(2) for discussion of significant reports.

iv


Funding and Staffing
The OIG Funding level for FY 1994 was $380,000. For FY 1994, approximately 34 percent was
expended for contract audit services; 51 percent, for salaries and benefits; 4 percent, for travel;
and 8 percent, for all other activities (training, equipment, space, supplies, etc.). The OIG
funding level represents about 35 percent of the total funds available to the Office of the Federal
Co-Chairman. FY 1995 funding for OIG is $400,000, with the division of expenditures
continuing at the approximate percentages as noted for FY 1994.

Initial OIG operations included authorization for an Inspector General and a Confidential
Assistant. A senior auditor was employed in the latter half of FY 1991; no additional staff have
been employed. Grant review activities will continue to emphasize use of contracted services
(¢.g., independent public accounting firms or other OIG offices) supplemented by programmatic
and performance reviews directed by OIG staff. Investigative assistance is provided by other
OIG offices on an as-needed basis. This approach has been deemed the most appropriate to date
in view of the nature of ARC operations and limited resources. However, we are participating
with other OIG offices to facilitate sharing of investigative resources in order to strengthen this
aspect of OIG operations. The OIG will continue to monitor this situation as well as the
efficiency and effectiveness of the use of contracted services.

WI. OG ACTIVITY
A. AUDITS

During the reporting period, 20 reports were issued, including 17 individual reviews and
3 program survey report. At the end of the reporting period, 5 grant reviews, 2 surveys and a
J-1 physician program review were in process. The division of OIG resources results in audit
work being performed by a combination of permanent and contractor staff. Emphasis continues
to be placed on surveys of ARC operations and programs, completion of grant audits, audit
planning, and audit resolution and followup. During the reporting period, the Inspector General
continued as Vice Chair of the Executive Council on Integrity and Efficiency (ECIE), which is
comprised of 32 statutorily designated Office of Inspectors General and nonstatutory Inspectors
General. The Inspector General was heavily involved with efforts to ensure implementation of
ECIE responsibilities for effective and efficient OIG operations.

During the term of the OIG operations at ARC, various recommendations, based on audit testing,
have been made to ARC management with respect to improving program operations in such areas
as accountability, financial management, fund obligations and deobligations based on project
activity, implementation of cost principles, and audit followup.

OIG followup tests and reviews of statistical information have reflected positive ARC actions to
address these issues and resulting improvements in program operations. For example, as noted in
report 94-19(H), grant closing and deobligation of funds have been emphasized; and the number
of funded projects, including business development and housing revolving loan funds with large
unobligated balances, has been substantially reduced. Also, substantial resources have been
devoted to assessing the J-1 visa waiver program and determining the extent of compliance with


APPALACHIAN REGIONAL COMMISSION

INSPECTOR GENERAL'S

SEMIANNUAL REPORT

TO CONGRESS

APRIL 1 - SEPTEMBER 30, 1994


B. INVESTIGATIONS

The Inspector General Act of 1978, as amended, provides that the Inspector General may receive
and investigate complaints or information concerning the possible existence of an activity
constituting a violation of law, rules, or regulations or mismanagement, gross waste of funds, or
abuse of authority. The OIG does not employ special investigators. Should the need arise, the
matter would be referred to the Federal Bureau of Investigation or assistance would be contracted
with another Federal Office of Inspector General. Also, the results of investigations may be
referred to the appropriate Federal, state, or local prosecutive authorities for action.

During the reporting period, a Memorandum of Understanding was signed with another Office
of Inspector General in order to obtain investigative assistance with Tespect to the J—-1 visa waiver
program. Our inquiry relative to this program is ongoing as of the end of the reporting period.

IV. AUDIT PLANNING

During FY 1995, audit work will include individual grant audits in about ten states; headquarters
Surveys with respect to grants management, including followup testing in areas such as staff
monitoring; and additional followup on open grants with completed budget periods, grant
extensions, revolving loan funds, and J-1 waiver program. Additional emphasis will be placed
on audit followup and corrective action plans, including working with agency management to
address open issues and achieve audit resolution and closure.

Also, emphasis will continue to be placed on programmatic and performance reviews. Limited
Tesources generally preclude substantive testing of a specific subject or function, but audit
planning includes identification of program subjects that can be tested in conjunction with audits
of individual grants. For example, programmatic reviews of subjects such as revolving loan
funds and J-1 waiver program activities should provide expanded and overall information with
Tespect to the particular subject areas; and the benefits to management are deemed sufficient to
continue this type of work despite a resource induced reduction in the number of individual grant
audits and/or the testing of financial and compliance issues.

Also, increased efforts will be made to incorporate Government emphasis on accountability and
performance measures in review. Financial and compliance testing will continue, but it is
anticipated that testing and evaluation of performance in terms of individual grants achieving
intended objectives and overall benefits derived from ARC activities will be the subject of
increased audit attention.

In order to maximize use of available resources directed at reviewing ARC activities, increased
emphasis continues to be placed on nonstandard reporting formats including memorandum, letter,
and survey reports. Although such reporting formats reduce the time and resources necessary for
teview completion, the results and information included in such reports is based on evidence and
supporting documentation consistent with generally accepted auditing standards.

The OIG will also be alert for new or revised areas of ARC operations based on the priorities
and emphasis of a new administration. Audit planning will include consideration of such
initiatives with the overall goal being to ensure coverage of high priority, including high dollar,

6


closing of 25 grants and deobligation of $333,441. We recommended additional
actions with respect to the grants noted and improved controls to ensure timely
actions on grants with expiring performance periods including designation of a
control unit, improved use of management information systems, and increased
followup by project coordinators to determine grant status.

A review of ARC's internal control procedures relating to grants, accounts
payable, payroll, budget oversight, and Federal regulatory reporting disclosed that
controls were generally effective and that ARC financial management personnel
were actively assessing accounting operations to further improve efficiency and
effectiveness, including a review of ARC's use of other agencies as service
bureaus to perform accounting and payroll functions. The review noted a need for
improved policies and procedures with respect to accounting functions and a need
for a better understanding of a service bureau's procedures in order to better utilize
information provided by the service bureau. ARC has Tecently converted its
accounting coding system to be compatible with the service bureau, which will
permit more effective use of reports and information.

ARC acts as a Federal sponsor for the J-1 visa waiver program, which permits
foreign physicians to remain in the US for a 2-year period upon completion of
training provided they provide primary care medical services in an Appalachian
Health Professional Shortage Area (HPSA). Substantial OIG resources have been
committed to assessing compliance with program requirements and addressing
concerns raised by employers and physicians. These concerns deal primarily with
the failure of physicians to complete 2 years of service in Appalachia;
Teassignment of physicians by employer to non-HPSAs; physician practice of
subspecialties, e.g. cardiology, rather than primary care; and justifications of the
need for J-1 waiver physicians.

OIG activity during the reporting period included reviews of justifications for J-1
visa waivers, field testing and followup with respect to location and use of J-1
physicians, coordination with another Federal agency participating in the program
to ensure consistent actions and reduce duplicative efforts, coordination with
applicable state health agencies responsible for local administration of this
Program, and interim recommendations to ARC with respect to approvals,
Teporting, and noncompete clauses impacting on accomplishments of program
objectives. Ongoing reviews will provide a basis for additional Federal and state
actions necessary to better ensure the program accomplishes its intended purposes.

Action is continuing with respect to resolution of grants for the Economic
Development Training Center, Pennsylvania State University. Audit followup has
included additional on-site discussion, review of additional information provided
by grantee, and preparation of a status report for use by ARC management. As
of the end of the reporting period, approximately $125,000 remained unresolved
with the primary issue being the applicable indirect cost rate.


° In order to avail itself of Federal agency expertise and administrative capability
in certain areas, the ARC often relies on other departments and agencies for
program administration, especially with respect to highways and infrastructure
projects. For example, the Appalachian Regional Development Act authorizes the
Secretary of Transportation to administer the Commission's highway programs.
Under this arrangement, the Commission retains responsibility for priorities,
highway locations, and fund allocations.

B. OFFICE OF INSPECTOR GENERAL

The ARC Office of Inspector General is an independent audit and investigation unit. The OIG
is headed by an Inspector General who reports directly to the Federal Co-Chairman.

Role and Authority
The Inspector General Act of 1978 (P.L. 95-452), as amended in 1988, states that the Inspector
General is responsible for (1) audits and investigations; (2) review of legislation; and
(3) recommendation of policies for the purpose of promoting economy and efficiency in the
administration of, or preventing and detecting fraud and abuse in, the program and operations of
the establishment. In this regard, the Inspector General is responsible for keeping the Federal
Co-Chairman and Congress fully informed about the problems and deficiencies in ARC programs
and operations and the need for corrective action. The Inspector General has authority to inquire
into all ARC programs and activities that are Federally funded. The inquiries may be in the form
of audits, surveys, investigations, personnel security checks, or other appropriate methods. The
two primary purposes of these inquiries are (1) to assist all levels of ARC management by
identifying and reporting problem areas, weaknesses, or deficiencies in procedures, policies,

program implementation, and employee conduct and (2) to recommend appropriate corrective
actions.

Relationship to Other Principal ARC Off

The States and the Federal Co-Chairman, acting together as the Commission, establish policies
for ARC's programs and its administration. These policies are codified in the ARC Code and
implemented by the Commission staff, which is responsible for monitoring project performance
and providing technical assistance as needed. The Federal Co-Chairman, as the Federal fiscal
officer, is responsible for the proper use and protection of Federal funds, for ensuring compliance
with applicable Federal laws and regulations, and for taking appropriate action on conditions
needing improvement, including those reported by the OIG. The operations of the OIG neither
replace established lines of operating authority nor eliminate the need for the commission offices
to take reasonable measures to protect and enhance the integrity and effectiveness of their
operations. All Commission offices are responsible for monitoring and evaluating the programs
entrusted to them and reporting information or incidences needing further audit and/or
investigation to the Inspector General.


EXECUTIVE SUMMARY

During this reporting period, 20 reports were issued, including 17 individual reviews and
3 program surveys. Primary recommendations were directed at improved accounting, financial
systems, internal controls, and deobligations of funds. At the end of the reporting period, 8
reviews were in process, i.e., 5 grant reviews, 2 headquarters surveys dealing with grants
management, and a major review of the J-1 physician waiver program.

We continued to emphasize improved grantee financial management systems, accomplishment
of grant objectives, eligibility of claimed costs, and timely actions to identify potential fund
deobligations. Recommendations were made for improvements in these areas. Three complaints
with respect to the J-1 waiver program, which provides for extension of resident provisions for
physicians who agree to work in the Appalachian Region, were reviewed; and entity audit
resolution actions include significant progress toward settlement of open issues and questionable
costs. Grant reviews during this period identified approximately $83,602 in questioned and
unallowable costs, which we attributed primarily to insufficient grantee accounting systems or
controls and limited understandings about allowable costs and provisions of applicable OMB
Circulars. Also, we identified the potential for better use of funds; and about $333,000 was
deobligated in connection with one report.

The Inspector General continued as the Vice Chair of the Executive Council on Integrity and
Efficiency (ECIE), which was established by Executive Order in May 1992 to provide for
coordination and cooperation between the 32 designated Offices of Inspector General (OIGs).
This responsibility included participating as a member of the President's Council on Integrity and
Efficiency (PCIE) and required extensive coordination and liaison between OIGs, OMB, and
Congressional sources with respect to OIG activities. The Inspector General appreciates the
support, cooperation, and assistance provided by ARC management to facilitate performance of
ECIE Vice Chair responsibilities.


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APPENDIX C

SCHEDULE OF AUDIT REPORTS WITH

RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE

For which no management decision was made by the
commencement of the reporting period

Which were issued during the reporting period

Subtotals (A + B)

For which a management decision was made during the
reporting period

(i) dollar value of recommendations that were
agreed to by management

——based on proposed management action

—~based on proposed legislative action

ii) dollar value of recommendations that were not
agreed to by management

For which no management decision has been made by the
end of the reporting period

Reports for which no management decision was made
within 6 months of issuance

No. of Dollar Value

Reports = ($ in thousands)

a $2.176
5 $2,176
2 $2,014
2 § 339.
2 $ 339
t $ 6
3 > 162

Management agreed to pursue all potential deobligations; and $333,000 represents the amount deobligated during

the reporting period.

Additionally, approximately $191,000 in RLF housing fund balances noted in a prior report was deobligated

during this reporting period.


Page

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Purpose and Requirements of the OIG Semiannual Report .............. iii

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Appendices A. Schedule of Audit Reports Issued
April 1 through September 30, 1994

B. Schedule of Audit Reports with Questioned or Unsupported Costs

Cc. Schedule of Audit Reports with Recommendations that Funds be put
to Better Use

D. Definition of Terms Used


Uttice oF inspector Generat
1666 Connecticut Avenue, NW
APPALACHIAN REGIONAL COMMISSION Washington, DC 20235

202.884.7675

December 5, 1994

MEMORANDUM FOR THE FEDERAL CO-CHAIRMAN

SUBJECT: Semiannual Report to Congress

In accordance with the requirements of the Inspector General Act Amendments of 1988, Public
Law 100-504, I am pleased to submit the semiannual report of the Office of Inspector General
for the period April 1 through September 30, 1994.

During this period, operational activities included issuance of 20 reports, including 17 individual
reviews and 3 program surveys. Primary recommendations were directed at improved
accounting, financial systems, internal controls, and deobligations of funds. We continued to
assist management in assuring physician and provider compliance with provisions of the J-1
waiver program and with audit resolution.

The Inspector General had continuing responsibilities as the Vice Chair of the Executive Council
on Integrity and Efficiency (ECIE), which was established by Executive Order in May 1992 to
provide for coordination and cooperation between the 32 designated Offices of Inspectozs General
(OIGs). This responsibility included participating as a member of the President's Council on
Integrity and Efficiency and required extensive coordination and liaison between OIGs, OMB,
and Congressional sources with respect to OIG activities. The Inspector General appreciates the
support, cooperation, and assistance provided by ARC management to facilitate performance of
ECIE Vice Chair responsibilities.

The continued support of the Office of Inspector General by ARC management and utilization
of OIG reports and recommendations have contributed to improved controls and operations. The
Inspector General Act of 1978, as amended by the Inspector General Act Amendments of 1988,
provides that this report be forwarded to appropriate Congressional committees within 30 days
and that you provide whatever additional comments you consider appropriate.

Mbattahed

Inspector General

Enclosure

A Partnership for the Development of Appalachia
Alabama * Georgia * Kentucky * Maryland * Mississippi * New York * North Carolina * Ohio

Pennsylvania * South Carolina * Tennessee * Virginia + West Virginia


areas in order to assist management fulfill responsibilities for efficient and effective program
operations.

Of particular importance is maintaining the flexibility of the audit plan to address changing needs
and priorities. Coordination with ongoing ARC efforts to develop an entity—wide strategic plan
are considered an important element of FY 1995 planning and discussions with new ARC
management has identified several areas for review. Also, planning will include emphasis on
incorporating elements noted in the Inspectors General Vision Statement issued during the prior
reporting period.

The OIG is also developing a strategic plan in line with recommendations made by the General
Accounting Office based on a review of the 32 designated IG offices. This effort also includes
cooperation with PCIE and ECIE members to identify methodologies for implementing
recommendations dealing with performance measures for OIGs.

Vv. OIG HOTLINE

A regionwide toll-free Hotline was previously established to enable direct and confidential
contact with the ARC OIG in line with Governmental and longstanding OIG initiatives as
identified in the IG Act of 1978 to afford opportunities for identification of areas subject to fraud,
waste, or abuse. Efforts continue to publicize the hotline by notifications to contractors and
grantees, and field visits evaluate the extent to which employees were made aware of this system.
However, contacts with the ARC OIG relative to public complaints or concerns continue to be
primarily received through ARC staff, on regular OIG phone lines, or from other OIG offices.

During the reporting period, numerous complaints were received with respect to the J-1 waiver
program. The ARC OIG initiated various reviews in response to these complaints, and the results
of these reviews will be detailed in future semiannual reports.

VI. LEGISLATIVE AND REGULATORY REVIEW

Primary efforts in this area continued to be related to requests for input about potential legislative
initiatives with respect to OIG operations. The ARC OIG continues to support legislation that
would provide improved protections for IGs, including designated and career IGs, by
consideration of alternatives such as removal for cause criteria and term limits. Also, the ARC
OIG supports extension of the Program Civil Fraud Penalties Act to include designated entities,
improved protection of designated IG budgets, comparable pay for designated IGs, and criteria
consistent with current qualification requirements for Presidentially appointed IGs.

Vil. OTHER

The Inspector General continued as the Vice Chair of the Executive Council on Integrity and
Efficiency, which was established by Executive Order in May 1992. The ECIE, which is chaired
by OMB, is comprised of the 34 statutorily designated IGs and other administratively established
IGs and is intended to promote the efficiency and effectiveness of the IG community. As such,

7


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