Audit Report

OIG-20-027

RESOURCE MANAGEMENT

Audit of the Department of the Treasury 

Departmental Offices Executive Pay 

Adjustments, Bonuses, and Awards

February 5, 2020

Office of Inspector General

Department of the Treasury
This Page Intentionally Left Blank
i

Contents

Audit Report

Results in Brief ...................................................................................................2

Background........................................................................................................6

Roles and Responsibilities................................................................7

SES Performance Appraisal System Certification ................................8

OER’s Administration of Treasury SES Members’ Performance Ratings, 

Pay Adjustments, and Bonuses .....................................................9

Audit Results....................................................................................................11

Finding 1 SES Rate of Basic Pay Was Higher than the Rate Permitted by Federal 

Regulations During a Gap in Treasury’s SES Performance Appraisal 

System Certification .....................................................................13

Recommendations ........................................................................17

Finding 2 Lack of Finalized Treasury-wide Policy for SES Pay and Awards or 

Documented OER SOPs.................................................................20

DASHR/CHCO’s Treasury-wide Policy for SES Pay and Awards Has Not 

Been Finalized...........................................................................21

OER Did Not Have Documented SOPs.............................................22

Recommendations ........................................................................25

Finding 3 Late Submission of Treasury’s Fiscal Year 2016 SES Data Call Report to 

OPM ...........................................................................................27

Recommendation..........................................................................29

Appendix 1: Objectives, Scope, and Methodology.................................................31

Appendix 2: Management Response....................................................................36

Appendix 3: Major Contributors to This Report.....................................................38

Appendix 4: Report Distribution..........................................................................39

Abbreviations

ARC Administrative Resource Center

CFR Code of Federal Regulations
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) ii

DASHR/CHCO Office of the Deputy Assistant Secretary for Human Resources 

and Chief Human Capital Officer 

DERB Department Executive Resource Board

DO Departmental Offices

EX Executive Schedule

GAO Government Accountability Office

OER Office of Executive Resources

OIG Office of Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management

OSPPI Office of Strategic Planning and Performance Improvement

PRB Performance Review Board 

SES Senior Executive Service

SOP standard operating procedure

JAMES Joint Audit Management Enterprise System

Treasury Department of the Treasury
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 1

February 5, 2020

David F. Eisner 

Assistant Secretary for Management

Department of the Treasury

This report presents the results of our audit of the Department of 

the Treasury (Treasury) Office of the Deputy Assistant Secretary 

for Human Resources and Chief Human Capital Officer’s 

(DASHR/CHCO) processes and practices related to pay 

adjustments, bonuses and awards1for Treasury Departmental 

Offices (DO)2executives. This audit was included in our fiscal year 

2018 annual audit plan. Our audit objective was to determine 

whether DASHR/CHCO complied with applicable laws, regulations, 

policies, and procedures when administering pay adjustments and 

bonuses for Treasury DO executives (hereinafter referred to as 

Senior Executive Service (SES) members). The scope of the audit 

included pay adjustments and bonuses authorized for the fiscal 

year 2016 performance period.

To accomplish our objective, we reviewed DASHR/CHCO’s 

processes and practices related to pay adjustments and bonuses 

for Treasury DO SES members. Specifically, we conducted 

interviews with Treasury officials and staff from the Office of

Executive Resources (OER), within DASHR/CHCO, responsible for 

administering performance ratings, pay adjustments, and bonuses 

for Treasury DO SES members. We reviewed applicable laws, 

regulations, guidance, policies, and procedures related to SES 

compensation. We reviewed supporting documentation for all

Treasury DO SES members who received bonuses for the fiscal 

year 2016 performance period, which were approved on 

 

1 Both bonuses and awards are collectively referred to as bonuses throughout this report.

2 DO is Treasury’s headquarters bureau responsible for providing leadership in economic and financial 

policy, financial intelligence and enforcement, and general management. The offices within DO are 

composed of divisions headed by Assistant Secretaries and Under Secretaries who are primarily 

responsible for policy formulation and overall management of Treasury. 
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 2

January 19, 2017. In addition, we reviewed relevant reports and 

documents—including, but not limited to, Treasury’s 

recommendations and approvals for proposed performance ratings, 

pay adjustments and bonuses; performance appraisals and bonus 

supporting records; Office of Personnel Management’s (OPM) 

certification of Treasury’s SES performance appraisal system; and 

Treasury’s data call report submitted to OPM. We conducted our 

fieldwork from December 2017 through August 2019 in 

Washington, DC. Appendix 1 contains a detailed description of our 

objective, scope, and methodology.

Results in Brief

We concluded that OER, within DASHR/CHCO, generally complied 

with applicable laws, regulations, policies, and procedures when 

administering performance ratings, pay adjustments, and bonuses 

for Treasury DO SES members authorized for the fiscal year 2016 

performance period. We found that all awardees approved by 

Treasury’s Deputy Secretary met the bonus eligibility requirements, 

and Treasury’s aggregate spending on SES performance bonuses 

did not exceed established thresholds.

However, we also found that DASHR/CHCO’s processes and 

practices related to pay adjustments and bonuses did not meet all 

the requirements established in 5 Code of Federal Regulations 

(CFR)

3 534.404, Setting and adjusting pay for senior executives,

and 5 CFR 534.405, Performance awards. For example, we found 

that OER did not comply with 5 CFR 534.404 (h)(2), Setting pay 

upon transfer, nor 5 CFR 534.403(a)(3)(b), Suspension of 

certification of performance appraisal system, during a gap in 

Treasury’s SES performance appraisal system certification.

Specifically, we found two instances where the SES rate of basic 

pay was higher than the rate permitted by Federal regulations 

during a gap in Treasury’s SES performance appraisal system 

certification, resulting in overpayments for two individuals.

In addition, we identified weaknesses in Treasury’s processes and 

practices related to pay adjustments, bonuses and awards. We

 

3 5 CFR, Administrative Personnel, January 1, 2015. The regulations were revised in January 2018; 

however, the sections and requirements referred to in this document did not change.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 3

noted (1) DASHR/CHCO has not finalized and approved Treasury’s 

SES Pay and Awards policy; (2) OER did not have standard 

operating procedures (SOPs) in place detailing the processes and 

procedures used for administering Treasury DO SES member 

performance ratings, pay adjustments, and bonuses; nor did they 

have procedures in place to ensure that there was an adequate and 

full understanding by SES’ supervisors and rating officials regarding 

exceptions to OPM’s 12-month rule relating to pay adjustments;

4

and (3) OER did not timely submit Treasury’s final fiscal year 2016 

SES data call report to OPM. In addition, the 2017 data call report 

did not include 11 individuals who had left Treasury. We were told 

that the lack of sufficient resources and workforce skills 

contributed to these weaknesses and the instances of noncompliance with Federal regulations.

We recommend that the Assistant Secretary for Management 

ensures:

1. DASHR/CHCO and OER develop, implement, and include 

effective internal controls within its policies and SOPs to ensure 

Treasury’s SES basic pay rates are in compliance with

5 CFR 534.403(a)(3)(b), Suspension of certification of 

performance appraisal system; and 5 CFR 534.404 (h)(2), 

Setting pay upon transfer.

2. DASHR/CHCO and OER calculate the overpayment amounts for 

the two DO SES members whose pay was set higher than 

allowed by regulation.

3. DASHR/CHCO and OER seek recovery of the overpayment 

amounts or exercise the authority to waive any claim in 

accordance with applicable Federal regulations and Treasury’s 

Directive 34-01, Waiving Claims Against Treasury Employees 

for Erroneous Payments. 

4. DASHR/CHCO and OER complete OPM data calls in accordance 

with OPM’s applicable instructions and guidance to ensure all 

required employees, such as those who have left Treasury, are 

properly reported.

 

4 The rule does not allow the adjustment of senior executive’s rate of basic pay more than once during

any 12-month period, without an exception.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 4

5. DASHR/CHCO assesses staffing levels, workforce skills, and 

respective budgets to determine whether additional personnel 

should and can plausibly be incorporated into future strategic 

planning to ensure OER can meet its goals and mission.

6. DASHR/CHCO finalizes and approves Treasury’s SES Pay and 

Awards policy, and then periodically reviews it for continued 

relevance, effectiveness, and transparency in making pay 

decisions and awarding performance bonuses.

7. OER documents the processes and SOPs, with appropriate 

detail, followed in administering Treasury DO SES member 

performance ratings, pay adjustments, and bonuses.

8. OER oversees the process regarding exceptions to the 12-month 

rule.

9. OER includes information regarding the approval process for 

waiver requests for exceptions to the 12-month rule in the 

instructions provided to bureau heads and DO policy offices. 

This information should be consistent with Federal regulations 

and Treasury’s SES Pay and Awards policy.

10. OER submits Treasury’s respective data call report to OPM by 

the due dates established by 5 CFR 534.405, Performance 

awards, and before any established deadlines per OPM’s annual 

data call memorandum.

As part of our reporting process, we provided a draft of this report 

to Treasury to obtain management’s views and comments. In a 

written response, provided in its entirety in appendix 2, 

management concurred with our findings and recommendations, as 

well as outlined corrective actions, planned and taken. Specifically, 

in response to recommendation number 1, DASHR/CHCO will 

develop, implement, and include effective internal controls within 

its policies and SOPs to ensure Treasury's SES basic pay rates are 

in compliance with the applicable regulations. With respect to 

recommendation numbers 2 and 3, relating to the overpayment 

amounts for two DO SES members, management stated that

DASHR/CHCO has initiated a review with the Administrative 
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Pay Adjustments, Bonuses, and Awards (OIG-20-027) 5

Resources Center (ARC)5to determine the amount of overpayments

associated with erroneous pay setting actions during the 2016

lapse in SES performance system certification; and is currently 

developing a plan for resolving the overpayment issue during 

Quarter 2 of fiscal year 2020. 

In addition, to address recommendation numbers 4 and 5 relating 

to the completion of OPM data calls in accordance with applicable 

instructions and guidance, and assessing DASHR/CHCO staffing 

levels, management responded that OER has shifted staff portfolios 

to establish a central specialist solely responsible for Treasury's 

performance, pay and awards program. This position will be held 

accountable for full compliance with OPM’s data call and applicable 

instructions to ensure all required employees are properly reported. 

The position will also ensure consistency, compliance with policy 

and OPM reporting timelines, and greater focus on OER's core 

performance responsibilities. In response to recommendation 

number 7, DASHR/CHCO has initiated a Treasury-wide 

performance process improvement review in collaboration with the 

Office of Strategic Planning and Performance Improvement (OSPPI) 

to identify outcomes and craft an improvement plan with specific 

actions.

Furthermore, in response to recommendation numbers 6, 8, and 9,

management responded that: (1) DASHR/CHCO will finalize the 

Treasury policy for SES Pay and Awards during Quarter 2 of fiscal 

year 2020, which will include a provision requiring periodic reviews 

to assess its continued relevance, effectiveness, and transparency 

in making pay decisions and awarding bonuses; (2) OER will 

document its responsibility for oversight of the process regarding 

exceptions to the 12-month rule into the Treasury policy for SES

Pay and Awards during Quarter 2 of fiscal year 2020; and (3) OER 

will include information, consistent with Federal regulations and 

Treasury's SES Pay and Awards policy, regarding the approval 

process for waiver requests for exceptions to the 12- month rule in 

the annual performance management guidance issued to Treasury 

bureaus and DO policy offices. To address recommendation 

number 10, management stated that DASHR/CHCO will establish 

OER accountability for the timely submission of Treasury's 

 

5 The Bureau of Fiscal Service’s Administrative Resource Center (ARC) is a Federal shared service 

provider that provides a full range of administrative services for various Federal agencies.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 6

respective data call report to OPM as part of the Treasury SES Pay 

and Awards policy. Management also responded that absent

OPM's annual data call memorandum, which provides agencies 

with a specific due date and outlines reporting

requirements/instructions, Treasury will submit data to OPM per 

5 CFR 534.405.

Management’s response and corrective actions, taken and planned, 

meet the intent of our recommendations. We have summarized the 

response in the recommendation sections of this report.

Management will need to record the estimated dates for completing 

any planned corrective actions as well as the actual date of 

completed corrective actions in the Joint Audit Management 

Enterprise System (JAMES), Treasury’s audit recommendation 

tracking system.

Background

The SES performance-based pay system provides authority to 

agencies in managing their executive resources, including the 

flexibility for selecting and developing Federal executives within a 

framework that preserves the larger corporate interests of 

government. The SES system covers managerial, supervisory, and 

policy positions classified above the General Schedule 15, which 

are not required to be filled by Presidential appointment with 

Senate confirmation. The typical compensation package for career 

appointed SES members includes salary, bonuses, and additional 

benefits. The SES pay range has a minimum and maximum rate of 

basic pay that is set each year by executive order, and is derived 

from basic pay rate levels established on the Executive Schedule

(EX). Pay ranges also depend upon each agency’s SES performance 

appraisal system certification from OPM.6 This certification allows 

agencies to pay SES members a higher pay range and aggregate 

limitation per individual. Agencies must demonstrate that their 

appraisal system(s) makes meaningful distinctions based on relative 

 

6 EX is the basic pay schedule for senior political official positions other than SES positions and 

positions in the Federal Bureau of Investigation and Drug Enforcement Administration SES. The EX 

schedule covers positions such as secretaries; under secretaries, deputy secretaries, and assistant 

secretaries; and a number of other key officials (e.g., certain general counsels and bureau directors).
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 7

performance and meet specific certification criteria established by 

OPM. 

Agencies are required by statute7to implement and fund a SES 

performance bonuses program. In general, performance bonuses to 

career appointed SES members are based on their performance 

during the most recently completed appraisal period. However, all 

pay adjustments and bonuses are discretionary and are not required 

or guaranteed, regardless of rating level. Agency heads approve 

performance pay adjustments and bonuses based on final summary 

ratings following recommendations by their agency Performance 

Review Boards (PRB). For the fiscal year 2016 performance period, 

there were 70 bonuses awarded to Treasury DO SES members 

totaling nearly $990 thousand, and 60 approved pay adjustments 

totaling approximately $230 thousand.

Roles and Responsibilities

5 CFR 534.404, Setting and adjusting pay for senior executives, 

requires agencies to designate authorized agency officials to set 

and adjust SES rates of basic pay. The Deputy Secretary of 

Treasury is the designated agency official for Treasury; also known 

as the appointing authority.

8 Among other responsibilities, the 

Deputy Secretary is responsible for the following: (1) ensuring the 

overall assessment of agency performance; (2) certifying that the 

SES appraisal system9 makes meaningful distinctions based on 

individual performance; (3) ensuring the appraisal system takes into 

account organizational accomplishments, as measured through 

comparison to program goals, and that subsequent performancebased pay decisions accurately reflect and recognize individual 

performance and/or contributions to agency performance; 

(4) making SES pay determinations that require approval by the 

agency head designee performing the assessment and oversight 

 

7 5 U.S.C. 5384 – Performance Awards in the Senior Executive Service

8 Treasury Order 102-01, Delegation of Authority Concerning Personnel Management, states that 

when no one is performing the duties of the Deputy Secretary, the Assistant Secretary for 

Management is authorized to perform these responsibilities.

9 According to 5 CFR 430.203, Definitions, appraisal system means a framework of policies and 

parameters established by an agency, as defined at 5 U.S.C. 4301(1), for the administration of 

performance appraisal programs under subchapter I of chapter 43 of 5 United States Code, and the 

“Subpart B—Performance Appraisal for General Schedule, Prevailing Rate, and Certain Other 

Employees.”
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 8

functions; and (5) approving, on an annual basis, Treasury’s SES 

members’ final performance ratings, performance-based pay 

adjustments, and bonuses.

10

DASHR/CHCO is responsible for department-wide policy and 

oversight in all areas of human capital management. Among other 

responsibilities, the office establishes policies and procedures for 

setting and adjusting the SES basic pay, and for granting bonuses 

to SES members. OER, within DASHR/CHCO, administers 

Treasury’s SES bonuses program. OER is responsible for providing 

expert guidance and leadership to Treasury-wide human resources 

executive resources programs. This includes policy development, 

administration and oversight, advice to Treasury management 

officials and bureaus on executive resources program matters, and 

implementation of Treasury-wide executive resources programs. 

The office also provides a full range of human resources services 

within DO such as, but not limited to, assistance with SES 

employment, compensation, performance management and 

bonuses, and reporting of related data.

SES Performance Appraisal System Certification

Before an agency may apply a higher pay range and individual 

aggregate limitation, Federal regulations require agencies’ SES 

performance appraisal system(s) to be certified by OPM, with 

Office of Management and Budget (OMB) concurrence, for making 

meaningful distinctions based on relative performance.11 Without a 

certified SES performance appraisal system, the SES pay range is a 

minimum rate of basic pay equal to 120 percent of the rate for 

General Schedule 15, step 1, and a maximum rate up to 

EX level III.

12, 13 Additionally, there is a calendar year aggregate 

 

10 Sarah Bloom Raskin served as Treasury’s Deputy Secretary during the administration of performance 

ratings, pay adjustments, and bonuses for Treasury DO SES members authorized for the fiscal year 

2016 performance period.

11 5 CFR 430.403, System certification

12 5 CFR 430.405, Procedures for certifying agency appraisal systems

13 Executive Order 13715, Adjustments of Certain Rates of Pay, announced the pay adjustments to 

statutory pay systems for 2016. There are five pay levels within the EX, which included EX level I, 

$205,700; EX level II $185,100; EX level III $170,400; EX level IV $160,300; and EX level V 

$150,200. The salary of the Vice President of the United States was $237,700.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 9

compensation limit per individual which is equal to the EX level I.

14

Certification of an agency’s SES appraisal system allows agencies 

to pay their SES members above EX level III, up to EX level II, and 

provide overall compensation up to the higher aggregate limit 

equivalent to the salary of the Vice President of the United States

during a calendar year.

OPM, with OMB concurrence, will certify an agency’s appraisal 

system(s) only when a review of the agency’s system(s) design, 

application, and administration reveals that the agency meets 

certification criteria and has followed required procedures for 

certifying agency appraisal systems.15 OPM, with OMB 

concurrence, may grant the agency either full (24 months) or 

provisional (12 months) certification of the agency’s performance 

appraisal system. The SES members’ authorization for higher rates

of basic pay, pay adjustments, and bonuses become effective upon

agencies receiving OPM’s certification.

OER’s Administration of Treasury SES Members’

Performance Ratings, Pay Adjustments, and Bonuses

The process for the administration of performance ratings, pay 

adjustments, and bonuses for Treasury SES members, which 

includes DO, begins by DASHR/CHCO issuing an instructions 

memorandum to bureau heads and DO policy offices. The 

instructions memorandum provides guidance regarding the 

transmission of SES members proposed performance ratings, pay 

adjustments, and bonuses to OER, within DASHR/CHCO, for

review and the Deputy Secretary’s final approval. The instructions 

memorandum is finalized once OPM and OMB issue the 

performance award guidance on awards for SES members; and the 

President’s executive order(s) announcing any pay adjustments, 

 

14 5 CFR 530.202, Subpart B—Aggregate Limitation on Pay, defines aggregate compensation as the 

total of basic pay, and certain payments such as the following: incentive and performance awards;

physicians’ comparability allowances; recruitment, relocation, and retention incentives; and other 

similar payments.

15 5 CFR 430.404, Certification criteria and 430.405, Procedures for certifying agency appraisal 

systems, establish specific certification criteria and procedures for certifying agency appraisal 

systems.
Audit of the Department of the Treasury Departmental Offices Executive 

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and any applicable spending limitations are issued.16 The 

instructions memorandum provides the timeline, parameters for 

decisions, and required procedures to follow in requesting the 

Deputy Secretary’s final approval of performance ratings, pay 

adjustments, and bonuses for all SES members in Treasury.

The following is a general description of the typical SES pay 

adjustments and bonuses processes:

• Treasury bureaus prepare and communicate initial summary 

ratings to SES members and ensure that SES members either 

sign their performance ratings and/or request the opportunity for 

a higher-level review.

• Bureau officials convene with their respective PRBs17 to review 

and consider proposed performance ratings, pay adjustments, 

and bonuses for all SES members, excluding top officials. For top 

officials (bureau heads and general counsel deputies), bureaus 

are required to submit signed performance appraisals, with pay 

adjustment and bonus recommendations, to OER for review by a 

Top Officials’ PRB.18

• After bureaus heads consider their PRB’s recommendations, they

certify and submit performance ratings, pay adjustments, and 

bonuses via a spreadsheet to OER for the Deputy Secretary’s

review and approval. Bureaus must also provide written 

certifications stating that they have considered organizational 

performance, held SES members accountable, and have made 

meaningful distinctions in performance. 

 

16 Executive Order 13714, Strengthening the SES, announced that starting in fiscal year 2017, 

agencies should limit their aggregate spending on agency performance awards for SES and Senior 

Level and Senior Scientific or Professional employees to 7.5 percent of aggregate SES and Senior 

Level and Senior Scientific or Professional employees’ salaries, respectively.

17 5 CFR 430.311, Performance Review Boards, requires that each agency must establish one or more 

PRBs to make recommendations to the appointing authority on the performance of its SES members. 

The PRB must make a written recommendation to the appointing authority about each SES member’s 

annual summary rating.

18 The Top Officials PRB is comprised of Treasury bureau heads and general counsel deputies, and is 

chaired by the Assistant Secretary for Management. The Top Officials PRB performs the same review 

and recommendation process as the DO PRB, but for the performance ratings of Treasury-wide top‐

official SES members (other bureau heads and general counsel deputies). PRB members may not 

participate in deliberations involving themselves or their supervisors or subordinates.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 11

• Upon concurrence with bureau performance ratings, pay 

adjustments, and bonuses, OER prepares a summary spreadsheet 

combining this information for Treasury SES members; the 

combined spreadsheet is then provided to the Department 

Executive Resource Board (DERB) for review. DERB reviews 

Treasury-wide SES performance data and certifies a 

recommendation to the Deputy Secretary for review and 

approval. During this process, DERB ensures that rating 

distinctions are made, pay and bonus recommendations are 

linked to ratings, and recommendations are consistent with 

organizational performance results. 

• Upon the Deputy Secretary’s approval, bureaus are subsequently 

notified and authorized to proceed with the processing of the 

pay adjustments and bonuses. For DO offices, OER coordinates 

with DO’s budget office to obtain accounting information and 

submits a final spreadsheet to ARC to process the payment 

action. 

• Once ARC processes the payment of final SES performance pay 

adjustments and bonuses, OER submits to OPM the required 

annual reporting data of SES performance ratings, pay 

adjustments, and bonuses.

Audit Results

We found that OER, within DASHR/CHCO, generally complied with 

applicable laws, regulations, policies, and procedures when 

administering performance ratings, pay adjustments, and bonuses 

for Treasury DO SES members for the fiscal year 2016 

performance period. As part of our audit testing, we reviewed all 

proposed performance ratings, pay adjustments, and bonuses for 

the 80 Treasury DO SES members included in the recommendation 

package sent to Treasury’s Deputy Secretary for approval to 

determine pay adjustment and/or bonus eligibility.19 There were 70 

proposed and approved bonuses, and 60 proposed and approved 

pay adjustments for Treasury DO SES members. We determined 

that all 70 bonus recipients met bonus eligibility requirements, and 

 

19 5 CFR 534.404, 530.404, and 534.405 (a) through (f), establish criteria for payment of performance 

awards to career appointees in the SES system.
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that all 60 pay adjustment recipients met pay adjustment eligibility 

requirements.20

The remaining 10 of the 80 Treasury DO SES members were 

included in the recommendation package; however, they were only 

being proposed for performance ratings and/or pay adjustments and 

not for bonuses. We confirmed that these 10 SES members did not 

meet the bonus eligibility requirements and/or left Treasury before 

the Deputy Secretary’s final approval. We were told that two SES 

members had left Treasury subsequent to the fiscal year 2016 

performance period. Although these SES members met the bonus 

eligibility requirements, they were not proposed for bonuses based 

on the discretion of their respective managers. We determined that 

the managers’ discretion was within guidelines. 

In addition, we determined that Treasury’s aggregate spending on 

SES performance bonuses did not exceed established statutory 

thresholds. We also verified that the SES members’ total aggregate 

compensation received for calendar year 2017, did not exceed the 

rate of pay of the total salary of the Vice President of the United 

States in 2017.

21

We also found that OER communicated with Treasury bureau 

heads and policy offices regarding SES performance close out 

instructions and guidance for transmitting respective SES ratings, 

pay adjustments, and bonus recommendations for Treasury’s 

approval process. Also, OER’s procedures for administering 

performance ratings, pay adjustments, and bonuses for Treasury 

SES members, which includes DO, included the required levels of 

review from the appropriate PRBs before they were approved by 

the Deputy Secretary.

However, as discussed below in finding 1, we noted OER did not 

comply with 5 CFR 534.404 (h)(2), Setting pay upon transfer, or 

5 CFR 534.403(a)(3)(b), Suspension of certification of performance 

appraisal system. We found two instances where the SES rate of 

basic pay was higher than the rate permitted by these Federal 

 

20 5 CFR 430.304, SES performance management systems, and 534.405, Performance awards, and 

DASHR/CHCO instructions memorandum, establish criteria for pay adjustment eligibility 

requirements.

21 5 CFR 530.203, Administration of aggregate limitation on pay
Audit of the Department of the Treasury Departmental Offices Executive 

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regulations during a gap in Treasury’s SES performance appraisal 

system certification.

In addition, as discussed below in findings 2 and 3, we identified 

weaknesses in Treasury’s processes and practices related to pay 

adjustments, bonuses and awards. Specifically, we noted 

(1) DASHR/CHCO has not finalized and approved Treasury’s SES 

Pay and Awards policy; (2) OER did not have SOPs in place 

detailing the processes and procedures used for administering 

Treasury DO SES member performance ratings, pay adjustments, 

and bonuses; and (3) OER did not timely submit Treasury’s final 

fiscal year 2016 SES data call report to OPM.

Finding 1 SES Rate of Basic Pay Was Higher than the Rate 

Permitted by Federal Regulations During a Gap in 

Treasury’s SES Performance Appraisal System 

Certification 

During the audit, we identified that two new SES members were 

paid higher than the rate of basic pay permitted by Federal 

regulations when there was a gap in Treasury’s certification. Per 

5 CFR 430.405, and as mentioned above, a SES member has a 

maximum pay range up to EX level II when an agency’s SES 

performance appraisal system is certified, and a maximum pay 

range up to EX level III if the system is not certified. For 2016, the 

maximum SES pay range for agencies with certified SES 

performance appraisal systems was $185,100; and for agencies 

without certified SES performance appraisal systems was

$170,400. 

We noted that Treasury had a gap in certification in 2016;22 and 

therefore, the maximum SES pay cap from July 8, 2016 through 

December 2016 should have been $170,400. We identified two 

Treasury DO SES members appointed to Treasury as SES members 

during Treasury's gap in certification that were paid salaries of 

$183,082 and $173,258, respectively, which were higher than the 

 

22 Treasury had provisional OPM certification for calendar years 2015, 2016, and 2017. However, for 

calendar year 2016, Treasury received an extension of its 2015 provisional certification; the 

extension expired on July 7, 2016. As a result, Treasury had a gap in certification from July 8, 2016 

to January 10, 2017.
Audit of the Department of the Treasury Departmental Offices Executive 

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rate of pay EX level III cap of $170,400 for non-certified appraisal 

systems.23 One of the two Treasury DO SES members transferred 

from another Federal agency; the other SES member joined 

Treasury from a position outside the Federal government. 

Per Federal regulations, a SES member whose rate of basic pay is 

higher than the rate of EX level III may not suffer a reduction in pay 

under certain circumstances. Specifically, 5 CFR 534.403(a)(3)(b), 

Suspension of certification of performance appraisal system, 

states:

A senior executive whose rate of basic pay is higher than the 

rate for level III of the Executive Schedule may not suffer a 

reduction in pay because his or her agency’s applicable 

performance appraisal system certification is suspended 

under 5 CFR 430.405(h)”. The senior executive will continue 

to receive his or her current SES rate and is not eligible for a 

pay adjustment until the senior executive is assigned to a 

position that would allow the employee to receive a pay 

adjustment or until certification of the employing agency’s 

applicable performance appraisal system is reinstated under 

5 CFR part 430, subpart D. 

In addition, 5 CFR 534.404 (h)(2), Setting pay upon transfer, 

states: 

A senior executive whose rate of basic pay is higher than the 

rate for level III of the Executive Schedule may not suffer a 

reduction in pay as a result of transferring to an agency 

where the maximum rate of basic pay for the applicable SES 

rate range is equal to the rate for level III of the Executive 

Schedule. 

Therefore, it would have been appropriate for the DO SES member 

transferring to Treasury to maintain her previous salary because 

she transferred from another Federal agency; however, as 

discussed further below, the DO SES member obtained an increase 

above her previous salary. Relating to the other DO SES member, 

she joined Treasury from a position outside of the Federal 

 

23 5 CFR 534.503, Definitions, states that the term ‘‘not certified’’ refers to a performance appraisal 

system that does not have certification, or for which a previously granted certification has expired or 

is suspended under §430.405(h).
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 15

government and; therefore, was ineligible and should not have 

been paid above the EX level III cap during Treasury’s gap in 

certification.

As stated above, we also noted that the previous salaries of the 

two Treasury DO SES were already higher than the cap of 

$170,400; however, these individuals obtained salary increases 

upon joining Treasury. More specifically, the SES member that 

transferred from another Federal agency had her pay set at 

$183,082, which is $5,333 (3 percent) higher than her previous

salary of $177,749. The Treasury DO SES member that came from 

a position outside the Federal government had her pay set at 

$173,258, which was also higher than her previous salary of 

$171,543.

As a result, based on the number of pay periods they worked

during the gap in certification, the two DO SES members received 

improper payments24 (i.e., overpayments or claims) totaling an 

estimated $2,550. Pursuant to Federal law, the head of an agency 

“shall try to collect a claim of the United States Government for 

money or property arising out of activities of, or referred to, the 

agency”.

25 The agency may waive claims of the United States 

against a person arising out of an erroneous payment of pay only if 

collection would be against equity and good conscience and not in 

the best interests of the United States.

26

According to Treasury’s Directive 34-01, Waiving Claims Against 

Treasury Employees for Erroneous Payments, dated April 22, 2015, 

DASHR/CHCO should: 

 promptly notify an employee upon discovery of an erroneous 

payment to that employee;

 promptly act to collect the erroneous overpayment following 

established debt collection policies and procedures;

 

24 An improper payment is defined as any payment that should not have been made or that was made 

in an incorrect amount (including overpayments and underpayments) under statutory, contractual, 

administrative, or other legally applicable requirements.

25 31 U.S.C. 3711, Collection and compromise

26 5 U.S.C. 5584(a), Claims for overpayment of pay and allowances, and of travel, transportation and 

relocation expenses and allowance
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 16

 establish reasonable time frames for employees to request a 

waiver in writing and for the deciding officials to review the 

waiver request; and 

 notify an employee whose request for waiver of claim is 

denied, in whole or in part, of the basis for the denial and 

the right to appeal the denial.

These procedures were not followed by the DASHR/CHCO or OER. 

When asked, an OER official acknowledged that these events were 

unintentional oversights made by management. The OER official 

stated that in both cases, the SES members were well into the SES 

recruiting process when the pay setting action requests were 

approved during Treasury’s gap in certification. During this time, 

OER experienced a major reorganization which included leadership 

turnover. The OER official stated that during the leadership 

turnover, OER’s Treasury-wide Policy and Operations functions 

merged and the Executive overseeing the combined function 

retired. Also, the OER official stated that there were skill gaps and 

challenges blending the two OER functions, resulting in a broader 

scope of responsibility and increased duties for OER’s staff that 

was already under-resourced. 

The OER official stated there was a void in leadership from April 

2016, until the time when the new Associate Chief Human Capital 

Officer was appointed in July 2016. The OER official further stated 

that OER’s major focus and priority during that time period, was to 

gain certification approval prior to the Deputy Secretary’s final 

decision on SES performance and the departure of leadership as a 

result of the Presidential transition.

In addition, we noted that one of the two DO SES members was 

not included on the fiscal year 2017 data call report to OPM, as 

required. According to OPM’s instructions for completing the data 

call reports,27 the report should have included SES members 

covered by the appraisal system during the appraisal period being 

reported on. Furthermore, the instructions state to include 

individuals who retired or left the agency during the appraisal 

period, as well as their effective dates of departure. The individual 

was one of 11 DO SES members who had left Treasury, but who 

 

27 OPM, Instructions for Completing the FY 2017 OPM Data Call for Senior Executive Service (SES) 

Ratings, Pay and Awards
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 17

were not included in the fiscal year 2017 data call report to OPM. 

An OER staff member stated these members were inadvertently 

left off the report. With that said, if the individual who had 

received the overpayment had been included on the fiscal year 

2017 data call report to OPM, OPM would have at least been made 

aware of the overpayment.

We also noted that DASHR/CHCO’s Treasury-wide Policy for SES 

Pay and Awards did not contain guidance specifically related to pay 

adjustment eligibility during a gap in an agency’s SES performance 

appraisal system certification. Without updated policies and 

procedures, there may be an increased risk of management 

oversight in setting and adjusting SES members’ basic pay.

Recommendations

We recommend that the Assistant Secretary for Management 

ensures:

1. DASHR/CHCO and OER develop, implement, and include 

effective internal controls within its policies and SOPs to ensure 

Treasury’s SES basic pay rates are in compliance with

5 CFR 534.403(a)(3)(b), Suspension of certification of 

performance appraisal system; and 5 CFR 534.404 (h)(2), 

Setting pay upon transfer.

Management Response

Management concurred with our recommendation and stated 

that DASHR/CHCO will develop, implement, and include 

effective internal controls within its policies and SOPs to ensure 

Treasury's SES basic pay rates are in compliance with 5 CFR

534.403(a)(3)(b), and 5 CFR 534.404(h)(2).

Office of Inspector General (OIG) Comment

Management’s response and planned corrective action meet the 

intent of our recommendation. Management will need to record 

the estimated date for completing its planned corrective actions 

in JAMES, Treasury’s audit recommendation tracking system.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 18

2. DASHR/CHCO and OER calculate the overpayment amounts for 

the two DO SES members whose pay was set higher than 

allowed by regulation. 

Management Response

Management concurred with our recommendation and stated 

that DASHR/CHCO has initiated a review with ARC to determine 

the amount of overpayments associated with erroneous pay 

setting actions during the 2016 lapse in SES performance 

system certification. 

OIG Comment

Management’s response and corrective action it has begun 

taking meet the intent of our recommendation. Management will 

need to record the estimated date for completing its corrective 

action in JAMES, Treasury’s audit recommendation tracking 

system.

3. DASHR/CHCO and OER seek recovery of the overpayment 

amounts or exercise the authority to waive any claim in 

accordance with applicable Federal regulations and Treasury’s 

Directive 34-01, Waiving Claims Against Treasury Employees for 

Erroneous Payments.

Management Response

Management concurred with our recommendation and stated 

that DASHR/CHCO is currently developing a plan for resolving 

the issue during Quarter 2 of fiscal year 2020.

OIG Comment

Management’s response and corrective action it has begun 

taking meet the intent of our recommendation. Management will 

need to record the estimated date for completing its corrective 

action in JAMES, Treasury’s audit recommendation tracking 

system.

4. DASHR/CHCO and OER complete OPM data calls in accordance 

with OPM’s applicable instructions and guidance to ensure all 
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 19

required employees, such as those who have left Treasury, are 

properly reported.

Management Response

Management concurred with our recommendation and stated 

that OER has shifted staff portfolios, establishing a central 

specialist solely responsible for Treasury's performance, pay and 

awards program. This position will be held accountable for full 

compliance with OPM's data call and applicable instructions to 

ensure all required employees are properly reported.

OIG Comment

Management’s response and taken corrective action meet the 

intent of our recommendation. Management will need to record 

the actual date of its corrective action in JAMES, Treasury’s 

audit recommendation tracking system.

5. DASHR/CHCO assesses staffing levels, workforce skills, and 

respective budgets to determine whether additional personnel 

should and can plausibly be incorporated into future strategic 

planning to ensure OER can meet its goals and mission.

Management Response

Management concurred with our recommendation and stated 

that OER has shifted staff portfolios to establish a central 

specialist solely responsible for Treasury's performance, pay and 

awards program to ensure consistency, compliance with policy 

and OPM reporting timelines, and greater focus on OER's core 

performance responsibilities.

OIG Comment

Management’s response and taken corrective action meet the 

intent of our recommendation. Management will need to record 

the actual date of its corrective action in JAMES, Treasury’s 

audit recommendation tracking system.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 20

Finding 2 Lack of Finalized Treasury-wide Policy for SES Pay and 

Awards or Documented OER SOPs 

During the audit, and as discussed further below, we found that 

DASHR/CHCO has not finalized Treasury‘s Policy for SES pay and 

awards. In addition, we found that OER did not have documented 

SOPs in place for administering Treasury DO SES member 

performance ratings, pay adjustments, and bonuses. The 

Government Accountability Office’s (GAO) Standards for Internal 

Control in the Federal Government,

28 states:

Management documents in policies for each unit its 

responsibility for an operational process’s objectives and 

related risks, and control activity design, implementation, 

and operating effectiveness. Each unit, with guidance from 

management, determines the policies necessary to operate 

the process based on the objectives and related risks for the 

operational process. Each unit also documents policies in the 

appropriate level of detail to allow management to 

effectively monitor the control activity.

Those in key roles for the unit may further define policies 

through day-to-day procedures, depending on the rate of 

change in the operating environment and complexity of the 

operational process. Procedures may include the timing of 

when a control activity occurs and any follow-up corrective 

actions to be performed by competent personnel if 

deficiencies are identified. Management communicates to 

personnel the policies and procedures so that personnel can 

implement the control activities for their assigned 

responsibilities.

Management periodically reviews policies, procedures, and 

related control activities for continued relevance and 

effectiveness in achieving the entity’s objectives or 

addressing related risks. If there is a significant change in an 

entity’s process, management reviews this process in a 

 

28 GAO, Standards for Internal Control in the Federal Government, Principle 12 – Implement Control 

Activities (GAO-14-704G, September 2014)
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 21

timely manner after the change to determine that the control 

activities are designed and implemented appropriately.

DASHR/CHCO’s Treasury-wide Policy for SES Pay and 

Awards Has Not Been Finalized

As of December 2018, we noted Treasury’s SES Pay and Awards 

policy was not finalized. The policy is essential because it includes 

the following: (1) a plan for setting and adjusting the rates of basic 

pay for SES members and the departmental policy for SES awards, 

and (2) Treasury offices’ roles and responsibilities, as well as 

general requirements and certain procedures for the processing of 

SES pay adjustments and bonuses. The plan within the policy is 

required to be established by Treasury in accordance with 

5 CFR 534.404 (g), Agency plan for setting and adjusting SES rate 

of basic pay. We noted that OER, within DASHR/CHCO, drafted 

the policy in 2013 to combine various pay policies, but did not 

finalize it during that time frame or subsequently during fiscal years

2016 and 2017 when updates were made.29 When we inquired as 

to why the policy has not been finalized, an OER official explained 

that the draft policy has been pending review by DASHR/CHCO‘s 

senior management since fiscal year 2013.

The plan includes the policies and criteria used to set and adjust a 

senior executive’s rate of basic pay;

30 the designation of the 

authorized agency official; and the administration and management 

controls that Treasury applied to ensure compliance with statutes, 

regulations, and certification requirements. Furthermore, as 

mentioned above, if a pay plan is not accepted by OPM as part of 

the performance appraisal system certification review process, SES 

members cannot be granted a higher pay rate. 

Although Treasury obtained OPM’s certification without a finalized 

policy, it is essential that the policy be finalized to promote 

effective management through a transparent, performance-based 

pay plan that: (1) makes meaningful pay distinctions among SES 

members based on relative performance; and (2) ensures that those 

who demonstrate the highest levels of individual performance 

 

29 The updates related to clarifying the Deputy Secretary’s role, reflecting new percentage ranges for 

awards, and preventing overlaps in preexisting percentage ranges for awards.

30 5 CFR 534.404 (g), Agency plan for setting and adjusting SES rate of basic pay
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 22

and/or greatest contributions to agency performance receive the 

highest rates of basic pay or pay adjustments in a calendar year. In 

addition, the plan should be periodically reviewed for continued 

relevance, effectiveness, and transparency in making pay decisions 

and performance awards. It also helps ensure that a standardized 

and reasonable process is followed in the administration of 

performance ratings, pay adjustments, and bonuses.

OER Did Not Have Documented SOPs

We found that OER did not have SOPs in place detailing the 

processes and procedures used for administering Treasury SES 

member performance ratings, pay adjustments, and bonuses; this 

includes DO SES members. An OER official told us that there are 

no formal or documented policies and procedures for managing and 

authorizing Treasury’s SES bonus process because OER staff are 

familiar with the procedures and process. With approximately five 

staff members within OER, the official further added that OER does 

not have the staff resources needed to draft the procedures. 

The SOPs for administering Treasury DO SES member performance 

ratings, pay adjustments, and bonuses process should be 

documented with appropriate detail to allow management to 

effectively monitor the process. Without consistent and 

documented policies and procedures, there may be: (1) a lack of 

standardization in the procedures used to administer Treasury DO 

SES member performance ratings, pay adjustments, and bonuses;

(2) a lack of staff knowledge of the processes, especially if a staff 

member leaves the organization; and (3) increased risk of errors in 

processing pay adjustments and bonuses. 

For example, an OER official told us that OER does not have 

procedures in place to maintain and track the receipt of bureau 

certifications, which are needed to help ensure certification 

requirements of Treasury’s SES performance appraisal system 

discussed above are met. This contributed to OER being unable to 

provide certifications for 3 of 8 DO policy offices. The official told 

us that the certifications could not be located and may have been 

added to the clearance review package sent to the Deputy 

Secretary. By the end of audit fieldwork, OER was still unable to 

locate the requested certifications. 
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 23

Additionally, we found that OER did not fully obtain documentation 

of the Deputy Secretary’s approval for management decisions 

regarding SES performance ratings, adjustments, bonuses and 

awards that were requested by OER. An OER official stated that 

was because there are no standard procedures used to obtain the 

Deputy Secretary’s approval. Also, the action memorandum for

fiscal year 2016 proposed performance ratings, pay adjustments, 

and bonuses for Treasury SES members lacked the Deputy 

Secretary’s official signature or initials. The Federal Records Act, 

section 3101, Records Management by Agency Heads, states: 

The head of each Federal agency shall make and preserve 

records containing adequate and proper documentation of the 

organization, functions, policies, decisions, procedures, and

essential transactions of the agency and designed to furnish the 

information necessary to protect the legal and financial rights of 

the Government and of persons directly affected by the

agency’s activities.

In addition, Treasury Directive 80-05, Records and Information 

Management Program, states:

Bureaus shall establish records management programs and 

ensure that such programs are effectively and efficiently 

managed in compliance with federal laws, regulations, and 

policies. 

It is essential that approvals and authorizations made by the 

Deputy Secretary regarding Treasury personnel are appropriately 

documented and clearly communicated by OER to properly execute 

and provide transparency of the overall approval process.

Furthermore, we noted that there were no procedures in place to 

ensure that there was an adequate and full understanding by the 

SES’ supervisors and rating officials regarding exceptions to OPM’s 

12-month rule. The rule does not allow the adjustment of senior 

executive’s rate of basic pay more than once during any 12-month 

period, without an exception.

31 Specifically, we noted that three 

 

31 5 CFR 534.404(6)(c), 12-month rule, states that an authorized agency official may adjust the rate of 

basic pay of a senior executive not more than once during any 12-month period. There are 

exceptions to this rule that are described in 5 CFR 534.404(6)(c)(3) and (4) relating to prescribed 

limits.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 24

Treasury SES members were subject to the 12-month rule during 

the fiscal year 2016 performance period. All three SES members 

were appointed to the SES during a similar time frame in fiscal year 

2016, and all met minimum performance rating requirements

established for receiving a pay adjustment. 

Documentation obtained confirmed that 1 of the 3 abovementioned Treasury DO SES members, was proposed and approved 

for a 12-month rule exception; however, the two remaining 

Treasury DO SES members were not proposed for a 12-month rule 

exception by their respective supervisor or rating official. 

Furthermore, the exception was approved based on merit and 

performance; however, the SES member who was approved for the 

exception received a lower performance rating than 1 of the other 

2 members. 

When asked, an OER official stated that waiver requests for 

exceptions to the 12-month rule are proposed by a SES member’s 

supervisor or rating official, reviewed by the PRB, and then 

submitted for approval by the Deputy Secretary. However, with 

several supervisors throughout Treasury and the potential lack of 

awareness of the exceptions, there is potential of inconsistent

consideration and application of the exceptions. Therefore, 

procedures should be put in place for OER to oversee the process 

to help ensure consistent consideration of the exceptions to the 

12-month rule throughout Treasury, which includes DO SES 

members. The procedures could include OER confirming that the 

respective supervisors are aware of these exceptions, as well as 

OER reviewing the initial summary of proposed performance 

ratings, pay adjustments, and bonuses recommendations submitted 

by the bureaus/offices for consistent consideration of the 

exception. 

We also noted that close-out instructions and guidance for 

transmitting SES ratings, pay adjustments, and bonus 

recommendations, provided by OER to Treasury bureau heads and 

DO policy offices, did not contain guidance regarding exceptions to 

the 12-month rule. Therefore, DO SES member supervisors and 

rating officials may have not been aware of the opportunity to 

request the exceptions to the 12-month rule on behalf of their 

employees. Although inclusion of this information in an instructions 

memorandum does not guarantee that a SES member would have 
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 25

been proposed for a 12-month rule exception by their supervisor or

rating official, it is essential that all information, including rules and 

exceptions, regarding the overall approval process, is clearly 

communicated. 

Recommendations

We recommend that the Assistant Secretary for Management 

ensures:

6. DASHR/CHCO finalizes and approves Treasury’s SES Pay and 

Awards policy, and then periodically reviews it for continued 

relevance, effectiveness, and transparency in making pay 

decisions and awarding bonuses. 

Management Response

Management concurred with our recommendation and stated 

that DASHR/CHCO will finalize the Treasury policy for SES Pay 

and Awards during Quarter 2 of fiscal year 2020. This policy 

will include a provision requiring periodic reviews to assess its 

continued relevance, effectiveness, and transparency in making 

pay decisions and awarding bonuses. Coupled with the policy 

review, OER will develop and forward SOPs for DASHR/CHCO 

review and approval.

OIG Comment

Management’s response and planned corrective actions meet 

the intent of our recommendation. Management will need to 

record the estimated date for completing its planned corrective 

actions in JAMES, Treasury’s audit recommendation tracking 

system.

7. OER documents the processes and SOPs, with appropriate 

detail, followed in administering Treasury DO SES member 

performance ratings, pay adjustments, and bonuses.

Management Response

Management concurred with our recommendation and stated 

that DASHR/CHCO initiated a Treasury-wide performance 

process improvement review in collaboration with OSPPI. 
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 26

Management also stated that the fiscal year 2019 performance 

process was used to map the current process and timeline and 

the main process improvement event is planned for January 

2020, to identify outcomes and craft an improvement plan with 

specific actions. Management’s goal is to implement and 

document actions and SOPs that ensure greater collaboration 

throughout the performance process and strengthen internal 

controls with staff practices.

OIG Comment

Management’s response and corrective actions, taken and 

planned, meet the intent of our recommendation. Management 

will need to record the estimated date for completing its 

planned corrective actions as well as the actual date of 

completed corrective actions in JAMES, Treasury’s audit 

recommendation tracking system.

8. OER oversees the process regarding exceptions to the 12-month 

rule. 

Management Response

Management concurred with our recommendation and stated 

that OER will document its responsibility for oversight of the 

process regarding exceptions to the 12-month rule into the 

Treasury policy for SES Pay and Awards during Quarter 2 of 

fiscal year 2020.

OIG Comment

Management’s response and planned corrective action meet the 

intent of our recommendation. Management will need to record 

the estimated date for completing its planned corrective actions 

in JAMES, Treasury’s audit recommendation tracking system.

9. OER includes information regarding the approval process for 

waiver requests for exceptions to the 12-month rule in the 

instructions provided to bureau heads and DO policy offices. 

This information should be consistent with Federal regulations 

and Treasury’s SES Pay and Awards policy.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 27

Management Response

Management concurred with our recommendation and stated 

that OER will include information, consistent with Federal 

regulations and Treasury's SES Pay and Awards policy, 

regarding the approval process for waiver requests for 

exceptions to the 12-month rule in the annual performance 

management guidance issued to Treasury bureaus and DO

policy offices.

OIG Comment

Management’s response and planned corrective action meet the 

intent of our recommendation. Management will need to record 

the estimated date for completing its planned corrective actions 

in JAMES, Treasury’s audit recommendation tracking system.

Finding 3 Late Submission of Treasury’s Fiscal Year 2016 SES Data 

Call Report to OPM 

We found that OER, within DASHR/CHCO, did not timely submit 

Treasury’s final fiscal year 2016 SES data call report to OPM.32,33

The data call report includes SES summary performance ratings, 

pay, pay adjustments, and bonuses data. Per 5 CFR 534.405, 

Performance awards, “agencies shall submit their distribution of 

performance awards, the total amount of awards, and the 

aggregate payroll or average rate of basic pay to OPM no later than 

14 days after the date the performance awards are approved by 

the agency.” In addition, per OPM’s data call memorandum and 

fiscal year 2016 data call instructions, agencies were required to 

submit SES summary performance ratings, pay, and awards data to 

OPM no later than March 3, 2017. 

Treasury’s Deputy Secretary approved final fiscal year 2016 SES 

performance ratings, pay adjustments, and bonuses on January 19, 

2017. Upon approval, in accordance with 5 CFR 534.405, 

Performance awards, Treasury was required to submit its data call 

 

32 OPM Memorandum for Human Resources Directors, Annual Data Call for Senior Executive Service 

(SES), Senior-Level (SL), and Scientific and Professional (ST) Performance Ratings, Pay and Awards 

for FY 2016 (December 20, 2016)

33 5 CFR 430.405 (g), Annual reporting requirements
Audit of the Department of the Treasury Departmental Offices Executive 

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report to OPM no later than February 2, 2017. However, OER did 

not submit Treasury’s data call report to OPM until August 25, 

2017, more than 6 months after the required due date and more 

than 5 months after the no later than date of March 3, 2017.

Additionally, on several occasions, OPM followed-up with OER 

regarding the data call report, and included targeted submission 

dates; however, OER was not able to meet OPM’s requests.

An OER official stated that the office was not aware of the 14 day 

submission requirement and that the office follows OPM’s annual 

data call instructions for the submission, which was due to OPM 

on March 3, 2017. The official stated that the office requested a 

waiver from OPM for the late submission; however, the official 

could not provide documentation of the request or approval of the 

waiver, and follow-up emails from OPM implied that an extension 

was never granted. The official also stated that because of OER’s

lack of staff resources, the office was not able to timely submit 

Treasury’s data call report to OPM. The official further stated that 

OER has experienced ongoing limited staffing, and that the matter 

has been discussed with DASHR/CHCO‘s senior management. The 

official also affirmed that since fiscal year 2016, OER lost one staff 

member who was assisting with the administration of Treasury’s 

performance bonuses program.

OER should ensure that the required data call report is submitted 

timely to OPM to prevent potential delays to OPM’s certification 

decision for Treasury and/or exclusion of Treasury’s data in OPM’s 

Annual Report on SES Pay and Performance Appraisal Systems. 

According to GAO’s Standards for Internal Control in the Federal 

Government:

Transactions are promptly recorded to maintain their 

relevance and value to management in controlling operations 

and making decisions. This applies to the entire process or 

life cycle of a transaction or event from its initiation and 

authorization through its final classification in summary 

records. 

Additionally, in the event that OPM determines that an agency's 

payments do not meet the requirements of law or regulations, the 

agency will have to take any necessary corrective action(s)

directed by OPM. Also untimely submission could potentially delay 
Audit of the Department of the Treasury Departmental Offices Executive 

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and/or risk Treasury’s SES performance appraisal systems from 

being certified by OPM. As a result, Treasury SES members may 

not receive the benefit of a higher pay range of basic pay and the 

increased aggregate limitation.

Recommendation

We recommend that the Assistant Secretary for Management 

ensures:

10. OER submits Treasury’s respective data call report to OPM by 

the due dates established by 5 CFR 534.405, Performance 

awards, and before any established deadlines per OPM’s 

annual data call memorandum.

Management Response

Management concurred with our recommendation and stated 

that DASHR/CHCO will establish OER accountability for the 

timely submission of Treasury's respective data call report to 

OPM as part of the Treasury SES Pay and Awards policy. 

Absent OPM's annual data call memorandum, which provides 

agencies with a specific due date and outlines reporting

requirements/instructions, Treasury will submit data to OPM 

per 5 CFR 534.405.

OIG Comment

Management’s response and planned corrective actions meet 

the intent of our recommendation. Management will need to 

record the estimated date for completing its planned corrective 

actions in JAMES, Treasury’s audit recommendation tracking 

system.

* * * * * *

We appreciate the courtesies and cooperation provided to our staff 

during the audit. If you wish to discuss the report, you may 

contact me at (202) 927-5776 or Daniel Gerges, Audit Manager, at 

(202) 927-0195. Major contributors to this report are listed in 
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 30

appendix 3. A distribution list for this report is provided as 

appendix 4.

/s/

Susan L. Barron

Director, Resource Management Audits
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 31

Appendix 1: Objectives, Scope, and Methodology

The objective of our audit was to determine whether the 

Department of the Treasury (Treasury) Office of the Deputy 

Assistant Secretary for Human Resources and Chief Human Capital 

Officer (DASHR/CHCO) complied with applicable laws, regulations, 

policies, and procedures when administering pay adjustments, 

bonuses and awards34 for Treasury Departmental Offices (DO) 

Senior Executive Service (SES) members. The scope of the audit 

included pay adjustments and bonuses authorized for the fiscal 

year 2016 performance period.

To accomplish our objective, we performed the following activities 

during audit fieldwork conducted in Washington, DC from 

December 2017 through August 2019:

• reviewed Federal laws, regulations, guidance, policies and 

procedures, including, but not limited to:

o 5 Code of Federal Regulations (CFR) – Administrative 

Personnel, Revised (January 1, 2015);

o Executive Order 13714, Strengthening the Senior Executive 

Service (December 11, 2015);

o Executive Order 13715, Adjustments of Certain Rates of Pay

(December 18, 2015);

o Executive Order 13756, Adjustments of Certain Rates of Pay

(December 27, 2016);

o Office of Management and Budget M-16-22, Guidance on 

Awards for SES and Senior Level/Senior Professional and 

Scientific Employees for Fiscal Year 2017 (August 12, 

2016);

o Office of Personnel Management (OPM) Appointments and 

Awards During the 2016 Presidential Election Period

(January 11, 2016);

 

34 Both bonuses and awards are collectively referred to as bonuses throughout this report.
Appendix 1: Objectives, Scope, and Methodology

Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 32

o Treasury Directive 14-003, Departmental Oversight for 

Executive Misconduct in Determining Pay Adjustments, 

Bonuses and Awards (September 24, 2014); and 

o DASHR/CHCO SES Pay and Award Policy Draft (most 

recently updated during 2017). 

• reviewed the following Treasury Office of Inspector General 

(OIG) reports relating to bonuses and awards for Treasury DO 

SES members:

o TTB Has Strengthened Controls over Conference, Travel, and 

Employee Award Administration, OIG-17-040 (March 1, 

2017); and 

o Treasury Established Appropriate Conference, Travel, and 

Award Policies, OIG-16-043 (May 20, 2016).

• reviewed the following Government Accountability Office (GAO) 

reports:

o Standards for Internal Control in the Federal Government, 

GAO-14-704G (September 10, 2014);

o Results Oriented Management: OPM Needs to Do More to 

Ensure Meaningful Distinctions Are Made in SES Ratings and 

Performance Awards, GAO-15-189 (January 2015);

o An Assessment of SES Performance Appraisal Systems, 

GAO/GGD-84-16 (May 16, 1984); and

o Actions Needed to Enhance the Credibility of Senior 

Executive Service Performance Award Programs, FPCD-81-

65 (September 30, 1981).

• interviewed Treasury officials in Washington, DC to gain an 

understanding of their roles and responsibilities related to 

administering performance ratings, pay adjustments, and 

bonuses for Treasury SES members, which includes DO SES 

members; 

• gained an understanding of the processes and procedures used

by the Office of Executive Resources (OER), within 

DASHR/CHCO, to administer performance ratings, pay 
Appendix 1: Objectives, Scope, and Methodology

Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 33

adjustments, and bonuses for Treasury SES members, which 

includes DO SES members;

• performed a walkthrough of the Treasury DO SES members

performance award process;

• performed testing of all 80 DO SES members proposed 

performance ratings, pay adjustments and bonuses 

recommended to Treasury’s Deputy Secretary for approval to 

determine whether OER, within DASHR/CHCO, complied with 

applicable laws. The testing performed included all 70 proposed 

and approved performance bonuses; all 10 proposed for 

performance ratings and/or pay adjustments that were not 

proposed for bonuses; and all 60 proposed and approved pay 

adjustments pertaining to Treasury DO SES members during the 

fiscal year 2016 performance period. As part of testing, the 

audit team performed the following:

o determined whether awardees met the “ratings, pay and 

bonus eligibility” criteria per 5 CFR 534.404, Setting and 

adjusting pay for senior executive, 5 CFR 534.405, 

Performance awards, and 5 CFR 430.304, SES performance 

management systems;

o verified that the total bonuses that Treasury paid SES 

members did not exceed the statutory limit required by 

Executive Order 13714 - Strengthening the Senior Executive 

Service;

o verified that the SES members total aggregate compensation 

received did not exceed the rate of pay of the total salary of 

the Vice President of the United States in calendar year 

2017, per 5 CFR 530.201, Purpose;

o verified that SES members that were appointed during the 

12-months prior to the end of the performance period did not 

receive an adjustment of their rate of basic pay per 

5 CFR 534.404(6)(c), 12-month rule;

o determined whether the complete listing of Treasury DO SES 

awardees for the fiscal year 2016 performance period was 

accurately reported in Treasury’s annual data call report 

submitted to OPM; and
Appendix 1: Objectives, Scope, and Methodology

Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 34

o determined whether DASHR/CHCO complied with Treasury’s 

authorization process for administering the performance 

ratings, pay adjustments, and bonuses for the fiscal year 

2016 performance period.

• reviewed key documentation provided by OER, within 

DASHR/ CHCO, and OPM including: 

o organizational charts;

o Treasury Action Memorandum for Deputy Secretary Raskin, 

FY-2016 Senior Executive Service Performance Ratings, 

Bonuses and Pay Adjustments (January 19, 2017) to verify 

that all pay adjustments and bonuses were approved by the 

Deputy Secretary;

o fiscal year 2016 and 2017 SES annual data call submitted to 

OPM to verify completeness of awardees’ data reported to 

OPM;

o Instructions for Completing the OPM Data Call for Senior 

Executive Service (SES) Ratings, Pay and Awards;

o 2015, 2016, and 2017 Treasury SES provisional certification 

letters to verify that OPM authorized Treasury to pay SES 

members above the EX-III pay rate;35

o DASHR/CHCO’s fiscal year 2016 SES performance cycle 

close out instructions to Treasury bureau heads that 

determined whether Treasury bureaus were provided with 

consistent information to administer the performance close 

out process; 

o DO SES awardee Standard Form 50s, Notification of 

Personnel Action, to verify position data and bonus amounts; 

and

 

35 EX is the basic pay schedule for senior political official positions other than SES positions and 

positions in the Federal Bureau of Investigation and Drug Enforcement Administration SES. The EX 

schedule covers positions such as secretaries; under secretaries, deputy secretaries, and assistant 

secretaries; and a number of other key officials (e.g., certain general counsels and bureau directors).
Appendix 1: Objectives, Scope, and Methodology

Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 35

o DO SES awardee performance appraisals to verify that 

awardees were on performance plans within an established 

minimum period before receiving performance ratings.

We conducted this performance audit 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 our findings and 

conclusions based on our audit objectives.
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 36

Appendix 2: Management Response
Appendix 2: Management Response

Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 37
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 38

Appendix 3: Major Contributors to This Report

Daniel Gerges, Audit Manager

Rafael Cumba, Auditor-in-Charge

Veleria Tettey, Auditor

Kajuana Britt, Referencer
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 39

Appendix 4: Report Distribution

The Department of the Treasury (Treasury) 

Secretary

Deputy Secretary 

Assistant Secretary for Management

Deputy Assistant Secretary for Human Resources and Chief

Human Capital Officer

Office of Strategic Planning and Performance Improvement 

Office of the Deputy Chief Financial Officer, Risk and Control 

Group

Office of Executive Resources

Director

Office of Management and Budget

Office of Inspector General Budget Examiner

Treasury Budget Examiner

Office of Personnel Management

Executive Resources and Performance Management

U.S. Senate 

Chairman and Ranking Member 

Committee on Homeland Security and Governmental Affairs 

Chairman and Ranking Member 

Committee on Finance 

Chairman and Ranking Member 

Committee on Appropriations 

Chairman and Ranking Member 

Committee on the Budget 

U.S. House of Representative 

Chairman and Ranking Member 

Committee on Oversight and Reform 

Chairman and Ranking Member 

Committee on Financial Services 
Appendix 4: Report Distribution

Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 40

Chairman and Ranking Member 

Committee on Appropriations 

Chairman and Ranking Member 

Committee on the Budget 
Audit of the Department of the Treasury Departmental Offices Executive 

Pay Adjustments, Bonuses, and Awards (OIG-20-027) 41

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