Semiannual Report to Congress

October 1, 2007 – March 31, 2008

May 2008

Federal Election Commission - Office of Inspector General

999 E Street, N.W. Suite 940, Washington, D.C. 20463
October 1, 2007 - March 31, 2008

i

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

May 22, 2008

The Honorable Nancy Pelosi

Speaker of the House of Representatives

Washington, D.C. 20515

Dear Madam Speaker:

Pursuant to the Inspector General Act of 1978, as amended, the Federal Election 

Commission submits the Inspector General’s Semiannual Report to Congress. The report 

summarizes the FEC’s Inspector General’s activity from October 1, 2007 through March 31, 

2008. During this reporting period, the FEC’s Inspector General completed the annual audit 

of the FEC’s  nancial statements and completed a performance audit of privacy and data 

protection. The Inspector General did not issue any reports that identi ed questioned costs or 

recommended that funds be put to better use.

The audit of the FEC’s  nancial statements resulted in an unquali ed (clean) opinion on the required statements: the FEC’s Balance Sheet, Statement of Net Costs, Statement 

of Changes in Net Position, Statement of Budgetary Resources, and Statement of Custodial 

Activity. The audit also found no instances of non-compliance with applicable laws and 

regulations. However, the auditors observed one material weakness in the area of an integrated  nancial management system and one signi cant de ciency in information technology 

(IT) security. FEC management is committed to resolving the issues noted and has entered 

an agreement with an OMB-certi ed Line of Business provider for  nancial services. With 

regard to IT, management appreciates the comments and recommendations on IT security issues. The FEC has developed a corrective action plan to address the weaknesses identi ed in 

the audit.

An audit of the FEC’s privacy and data protection practices resulted in seven  ndings. In response to the audit and with input from the Inspector General, FEC management 

promptly developed a corrective action plan to implement the audit recommendations.

The Commission appreciates and shares the Inspector General’s commitment to 

sound  nancial and management practices, and we anticipate a continued cooperative 

working relationship as management takes appropriate measures to improve operations of 

OFFICE OF THE CHAIRMAN
Office of Inspector General Semiannual Report to Congress

ii

the Commission. Copies of this semiannual report are being provided to the Chairman and Ranking 

Members of the FEC’s oversight committees.

 Sincerely,

 David M. Mason

 Chairman

Enclosure
October 1, 2007 - March 31, 2008

iii

MANAGEMENT REPORT ON FINAL ACTION

ON AUDITS WITH QUESTIONED COSTS

FOR THE SIX-MONTH PERIOD ENDING MARCH 30, 2008

Number of

Audit Reports

Questioned 

Costs

Unsupported 

Costs

A. Audit reports for which no management 

decision has been made by commencement 

of the reporting period

0 0 [0]

B. Audit reports issued during the reporting 

period 0 0 [0]

Subtotals (A + B) 0 0 [0]

C. Audit Reports for which a management 

decision was made during the reporting 

period

0 0 [0]

(i) dollar value of disallowed costs 0 0 [0]

(ii) dollar value of costs not disallowed 0 0 [0]

D. Audit Reports for which no management 

decision has been made by the end of the 

reporting period

0 0 [0]

E. Audit Reports for which no management 

decision was made within six months of 

issuance

0 0 [0]
Office of Inspector General Semiannual Report to Congress

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MANAGEMENT REPORT ON FINAL ACTION

ON AUDITS WITH RECOMMENDATION TO PUT FUNDS TO BETTER USE

FOR THE SIX-MONTH PERIOD ENDING MARCH 30, 2008

Number of Audit 

Reports

Funds to be Put to 

Better Use

A. Audit reports for which no management decision has 

been made by the commencement of the reporting 

period

0 0

B. Audit reports issued during the reporting period 0 0

C. Audit Reports for which a management decision was 

made during the reporting period 0 0

(i) dollar value of recommendations that were agreed to

 by management 0 0

 - based on proposed management action 0 0

 - based on proposed legislative action 0 0

(ii) dollar value of recommendations that were not

 agreed to by management 0 0

D. Audit Reports for which no management decision has 

been made by the end of the reporting period 0 0

E. Audit Reports for which no management decision was 

made within six months of issuance 0 0 
October 1, 2007 - March 31, 2008

v

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

OFFICE OF THE INSPECTOR GENERAL

A Message from the Inspector General

I would like to congratulate the staff of the Offi ce of Inspector General for a very 

successful semiannual period. During this time, the OIG completed and released the 

Audit of the Federal Election Commission’s Fiscal Year 2007 Financial Statements, the 

2007 Performance Audit of Privacy and Data Protection, completed a peer review of 

another OIG and had a peer review conducted on our audit function. I am pleased to 

state that the Offi ce of Inspector General received an unqualifi ed (clean) opinion on 

our audit function. We also responded to numerous requests from FEC management 

for input into new agency policies and procedures.

During earlier semiannuals, I had expressed my concern over the lack of additional 

resources for the OIG. Th e FEC budget for 2009 contained a request for two 

additional staff for the offi ce, and as a consequence of agency salary lapse, we are 

in the process of fi lling those two positions this fi scal year. Th ese two additional 

positions will add much needed assistance to the OIG and I am very pleased we can 

fi ll them this fi scal year. 

In conjunction with our audit of the FEC’s privacy and data protection function, 

the OIG facilitated a presentation with the agency’s Commissioners and executive 

management team and the contractor who conducted the audit. Th is was the initial 

step to educate the senior leaders of the agency on the importance of having a 

governance structure in place, setting the appropriate tone at the top, and the vital 

role internal controls play in all aspects of agency management. We look forward to 

continuing this discussion with the agency.

Lynne A. McFarland

Inspector General

Federal Election Commission

April 30, 2008
Office of Inspector General Semiannual Report to Congress

vi

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October 1, 2007 - March 31, 2008

vii

Table of Contents

Executive Summary 1

The Federal Election Commission 3

Office of Inspector General 4

OIG Audit Activity

Audit of the Federal Election Commission’s

Fiscal Year 2007 Financial Statements

2007 Performance Audit of Privacy and 

Data Protection

OIG Hotline Information 9

OIG Investigations 10

Additional OIG Activity 11

ECIE and PCIE Activity 13

Reporting Requirements 14

Table I – Inspector General Issued Reports With 

Questioned Costs

Table II – Inspector General Issued Reports With Recommendations 

That Funds Be Put To Better Use

Table III – Summary Of Audit Reports With Corrective Actions 

Outstanding For More Than Six Months

OIG Strategic Plan - Fiscal Years 2005 – 2010 18

OIG Contacts 19

List of Training, Meetings and Conferences 20

Contacting the Office of Inspector General (inside back cover)

5

7

15

16

17
Office of Inspector General Semiannual Report to Congress

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October 1, 2007 - March 31, 2008

1

Executive Summary

the financial position of the FEC as of September 30, 

2007 and 2006, and its net cost, changes in net position, budgetary resources, and custodial activity for 

the years then ended in conformity with accounting 

principles generally accepted in the United States of 

America.

In the Independent Auditor’s Report dated November 

7, 2006, CG-LLP expressed a qualified opinion on 

the FY 2006 statement of net cost because they 

were not able to obtain sufficient competent audit 

evidence to support the FEC’s allocation of program 

costs. Since the FEC has changed the presentation of program costs in its statement of net cost, the 

present opinion on the FY 2006 financial statements 

is different from that expressed in the previous report 

(for more information see the section entitled OIG 

Audit Activity located on page 5).

The OIG also completed and released the 2007 

Performance Audit of Privacy and Data Protection – 

OIG-07-02, December 2007. On December 8, 2005, 

the President signed the Transportation, Treasury, 

Independent Agencies and General Government 

Appropriations Act, 2005. This annual appropriations law contained a new section, Division H, Title V, 

§ 522 relating to privacy controls of certain Federal 

agencies.

Section 522 requires certain agencies to assign a 

Chief Privacy Officer (CPO) who is responsible for 

identifying and safeguarding personally identifiable 

information (PII). Section 522 also requires an independent third-party review, contracted by the OIG, of 

agency use of PII and of its privacy and data protection policies and procedures at least every two 

years. The OIG selected Cotton & Company as the 

independent contractor to conduct a performance 

audit of privacy and data protection policies and procedures and, specifically, to determine if the FEC 

The Inspector General Act of 1978, as amended, states that the Inspector General is responsible for conducting audits, inspections, investigations, and recommending policies and procedures 

that promote economic, efficient, and effective use 

of agency resources and programs that prevent 

fraud, waste, abuse and mismanagement. The IG 

Act also requires the Inspector General to keep 

the Commission and Congress fully and currently 

informed about problems and deficiencies in the 

Commission’s operations and the need for corrective 

action.

This semiannual report includes the major accomplishments of the Office of Inspector General, as well 

as relevant information regarding additional OIG activities. The executive summary highlights the most 

significant activities of the OIG. Additional details 

pertaining to each activity can be found in subsequent sections of this report.

The Audit of the FEC’s Fiscal Year 2007 Financial 

Statements – OIG-07-01 was completed and released November, 2007. Under a contract supervised by the OIG, the independent certified public 

accounting firm Clifton Gunderson LLP (CG-LLP) 

performed the audit of the FEC’s FY 2007 financial 

statements. The OIG was responsible for 1) reviewing the auditor’s approach and planning of the audit; 

2) evaluating the qualifications and independence of 

the auditors; 3) monitoring the work of the auditors; 

4) examining audit documents and reports to ensure 

compliance with Government Auditing Standards, 

and OMB Bulletin No. 07-04, Audit Requirements for 

Federal Financial Statements; and 5) other procedures the OIG deems necessary to oversee the contract and audit.

The CG-LLP report concluded that the FEC’s financial statements present fairly, in all material respects, 
Office of Inspector General Semiannual Report to Congress

2

is complying with section 522 of the Consolidated 

Appropriations Act, 2005.

The audit resulted in seven findings – the final report 

was published on the OIG Web page on December 

7, 2007 (for more information see the section entitled 

OIG Audit Activity located on page 7).

The OIG conducts audits in accordance with generally accepted government auditing standards 

(GAGAS). Audit organizations conducting audits in 

accordance with GAGAS are required to have an independent peer review every three years. This year 

the FEC OIG was required to have a peer review 

conducted on its audit operations. The Appalachian 

Regional Commission (ARC) Office of Inspector 

General conducted a peer review on the FEC OIG. 

An entrance conference was held and the majority 

of the fieldwork was conducted at the FEC. The final 

report was provided to the OIG on March 28, 2008 

and contained an unqualified (clean) opinion (for 

more information see the section entitled Additional 

OIG Activity, page 11).

The OIG received a letter from The Honorable 

Henry A. Waxman, U.S. House of Representatives, 

requesting a list of recommendations, made by the 

OIG from January 1, 2001 to present, that have not 

been implemented by Congress or agency officials. 

The OIG provided Representative Waxman with a 

list of outstanding recommendations from 2006 to 

present as the FEC has implemented all recommendations made prior to 2006 (for more information 

see the section entitled Additional OIG Activity, page 

12).

Due to potential passage of legislation affecting the 

Inspector General community, the PCIE and the 

ECIE formed a committee composed of four IGs 

from the PCIE and four IGs from the ECIE to assist 

in the transition and to decide what steps need to be 

taken by the community if a bill passes. The FEC IG 

is an ECIE representative to the transition committee. 

During the last several months, the committee met 

four times to discuss issues related to combining the 

two IG councils. Additional information pertaining to 

the IG’s involvement in the ECIE and PCIE activities 

can be found in the section entitled ECIE and PCIE 

Activity, page 13.

In response to a Federal Acquisition Regulation 

(FAR) requirement to increase fraud awareness at 

federal agencies, the OIG created a fraud hotline 

poster. The purpose of the OIG fraud hotline poster 

is to provide an increased awareness to FEC employees and contractors on fraud awareness and 

how to report fraud, waste, abuse and mismanagement to the OIG (for more information see the section entitled OIG Hotline Information, page 9).

As this reporting period comes to a close, the OIG 

had 10 hotline complaints at various stages. In addition, management informed the OIG that action had 

been taken against an employee based on information provided in a previous OIG investigation (for 

more information pertaining to the hotline issues, 

see the section entitled OIG Hotline Information located on page 9; for more information on the investigation see the section entitled OIG Investigations 

located on page 10).
October 1, 2007 - March 31, 2008

3

the federal election commission 

In 1975, Congress created the Federal Election 

Commission (FEC) to administer and enforce the 

Federal Election Campaign Act (FECA). The duties 

of the FEC, an independent regulatory agency, are to 

disclose campaign finance information; enforce the 

provisions of the law; and oversee the public funding 

of Presidential elections.

The Commission is made up of six members, who 

are appointed by the President and confirmed by 

the Senate. Each member serves a six-year term, 

and two seats are subject to appointment every two 

years. By law, no more than three Commissioners 

can be members of the same political party, 

and at least four votes are required for any official Commission action. The Chairmanship of the 

Commission rotates among the members each year, 

with no member serving as Chairman more than 

once during his or her term. Currently, the FEC has 

two Commissioners – David M. Mason, Chairman 

and Ellen L. Weintraub, Vice Chair.
Office of Inspector General Semiannual Report to Congress

4

The Inspector General Act of 1978 (P.L. 100-504), 

as amended, states that the Inspector General is responsible for: 1) conducting and supervising audits 

and investigations relating to the Federal Election 

Commission’s programs and operations; 2) detecting and preventing fraud, waste, and abuse of 

agency programs and operations while providing 

leadership and coordination; 3) recommending policies designed to promote economy, efficiency, and 

effectiveness of the establishment; and 4) keeping 

the Commission and Congress fully and currently 

informed about problems and deficiencies in FEC 

agency programs and operations, and the need for 

corrective action.

Office of Inspector General
October 1, 2007 - March 31, 2008

5

Audit of the Federal Election Commission’s 

Fiscal Year 2007 Financial Statements

Assignment Number: OIG – 07-01

Status: Released November, 2007 

http://www.fec.gov/fecig/financial07.pdf

Financial audits provide assurance as to whether 

the agency’s financial statements fairly present the 

financial position of the agency’s programs and 

costs of operations. In addition, the financial statement audit reports on the internal controls that support accurate financial reporting and compliance 

with applicable laws and regulation.

In accordance with the Accountability of Tax Dollars 

Act of 2002, the FEC prepared financial statements 

for the 2007 fiscal year in accordance with Office 

of Management and Budget (OMB) Circular No. 

A-136, Financial Reporting Requirements. The Chief 

Financial Officers Act of 1990 (Public Law 101-576, 

commonly referred to as the “CFO Act”), as amended, requires the FEC IG, or an independent external 

auditor selected by the Inspector General, to audit 

the agency financial statements.

Under a contract supervised by the OIG, the independent certified public accounting firm Clifton 

Gunderson LLP (CG-LLP) performed the audit of 

the FEC’s FY 2007 financial statements. The OIG 

was responsible for 1) reviewing the auditor’s approach and planning of the audit; 2) evaluating the 

qualifications and independence of the auditors; 3) 

monitoring the work of the auditors; 4) examining 

audit documents and reports to ensure compliance 

with Government Auditing Standards, and OMB 

Bulletin No. 07-04, Audit Requirements for Federal 

Financial Statements; and 5) other procedures the 

OIG deems necessary to oversee the contract and 

audit.

The audit included an examination, on a test basis, of evidence supporting the amounts and disclosures in the financial statements. The audit also 

included assessing the accounting principles used 

and significant estimates made by management, as 

well as evaluating the overall principal statements’ 

presentation.

The CG-LLP report concluded that the FEC’s financial statements present fairly, in all material 

respects, the financial position of the FEC as of 

September 30, 2007 and 2006, and its net cost, 

changes in net position, budgetary resources, and 

custodial activity for the years then ended in conformity with accounting principles generally accepted 

in the United States of America.

In the Independent Auditor’s Report dated 

November 7, 2006, CG-LLP expressed a qualified 

opinion on the FY 2006 statement of net cost because they were not able to obtain sufficient competent audit evidence to support the FEC’s allocation 

of program costs. Since the FEC has changed the 

presentation of program costs in its statement of net 

cost, the present opinion on the FY 2006 financial 

statements is different from that expressed in the 

previous report.

Report on Internal Control

CG-LLP’s planning and performance of the audit 

included consideration of the FEC’s internal control over financial reporting as a basis for designing 

audit procedures for the purpose of expressing an 

opinion on the financial statements and to comply 

with OMB Bulletin 07-04. The auditors did not test all 

internal controls relevant to operating effectiveness, 

OIG Audit Activity
Office of Inspector General Semiannual Report to Congress

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such as those controls relevant to ensuring efficient operations and consequently CG-LLP did not 

express an opinion on the agency’s internal control 

over financial reporting.

The American Institute of Certified Public 

Accountants (AICPA) established standards on communicating deficiencies related to an entity’s internal control over financial reporting identified by the 

auditors. As defined by the AICPA, a control deficiency exists when the design or operation of a control does not allow the agency’s management or its 

employees, in the normal course of performing their 

assigned duties, to prevent or detect misstatements 

on a timely basis.

Auditors determine whether an internal control deficiency is a significant deficiency or a material weakness based on the factors of likelihood and magnitude. A significant deficiency is a control deficiency, 

or combination of control deficiencies, that adversely 

affect the agency’s ability to initiate, authorize, record, process, or report financial data reliability in 

accordance with generally accepted accounting 

principles such that there is more than a remote likelihood that a misstatement of the agency’s financial 

statements that is more than inconsequential will not 

be prevented or detected by the agency’s internal 

control. A material weakness is a significant deficiency, or combination of significant deficiencies, 

that results in more than a remote likelihood that a 

material misstatement of the financial statements 

will not be prevented or detected by the agency’s internal controls.

CG-LLP identified a material weakness in the area of:

● Integrated Financial Management System

CG-LLP identified a significant deficiency in the area of:

● Information Technology (IT)

Report on Compliance and Other Matters

FEC management is responsible for complying with 

laws and regulations applicable to the agency. To 

obtain reasonable assurance about whether FEC’s 

financial statements are free of material misstatements, CG-LLP performed tests of compliance with 

certain provisions of laws and regulations, non-compliance with which could have a direct and material 

effect on the determination of financial statement 

amounts, and certain laws and regulations specified in OMB Bulletin No. 07-04, such as the AntiDeficiency Act and the Prompt Payment Act.

The results of CG-LLP’s tests of compliance with 

laws and regulations described in the audit report 

disclosed no instances of noncompliance with the 

laws and regulations that are required to be reported 

under Government Auditing Standards and OMB 

Bulletin No. 07-04.
October 1, 2007 - March 31, 2008

7

complying with Section 522 of the Consolidated 

Appropriations Act, 2005. An OIG meeting was held 

with Cotton & Company representatives to discuss 

general FEC working arrangements and to provide 

the background information such as the Privacy 

Report submitted to the OIG in February 2007. 

A formal entrance conference with key FEC personnel responsible for privacy activities within the 

Commission was held September 28, 2007.

The audit involved the use of an electronic survey to 

determine the extent of privacy awareness among 

FEC staff and the types of systems, both manual 

and electronic, which might be subject to System 

of Records Notification (SORN) publication in the 

Federal Register and/or require physical or electronic controls to protect data privacy. Further, an after 

hours walkthrough of FEC business areas was conducted by the OIG and Cotton & Company to determine whether physical records containing PII were 

adequately secured.

A number of records containing PII were not adequately secured and the OIG contacted two FEC 

business areas to relay the results of the walkthrough and recommended immediate corrective action to secure PII.

Throughout the audit, the contractor provided weekly status reports which were reviewed by the OIG 

and forwarded to FEC management. The reports 

detailed audit activities, planned activities for the 

coming week, outstanding audit requests, and draft 

findings. Further, Cotton & Company held a midaudit status meeting with both the OIG and FEC 

management. The contractor provided written notification of findings and recommendations (NFRs) 

and conducted a formal meeting to discuss the draft 

findings. Cotton & Company solicited comments, 

pertaining to the draft findings, from the OIG and 

FEC management.

Cotton & Company held an exit conference to discuss the draft report which included FEC management responses to the findings. The final report was 

published on the OIG Web page on December 7, 

2007 in accordance with the original audit schedule. 

The audit resulted in seven findings, two of which 

did not have management concurrence.

2007 Performance Audit of Privacy and Data 

Protection

Assignment Number: OIG – 07-02

Status: Released December, 2007

http://www.fec.gov/fecig/2007Privacy.pdf

On December 8, 2005, the President signed the 

Transportation, Treasury, Independent Agencies and 

General Government Appropriations Act, 2005. This 

annual appropriations law contained a new section, 

Division H, Title V, §522 relating to privacy controls 

of certain Federal agencies.

Section 522 requires certain agencies to assign 

a Chief Privacy Officer (CPO) who is responsible 

for identifying and safeguarding personally identifiable information (PII). Section 522 also requires an 

independent third-party review, contracted by the 

OIG, of agency use of PII and of its privacy and data 

protection policies and procedures at least every 

two years. The OIG surveyed the PCIE and ECIE 

community to determine how many agencies were 

required to conduct a 522 Privacy audit and whether 

the audit had been completed. Based on the results, 

the OIG contacted the affirming offices to determine 

who performed the review and, where possible, obtained a copy of the statement of work or scope and 

the resulting report. The survey results were compiled and provided to all ECIE and PCIE offices as 

feedback.

In order to plan for the audit, the OIG attended 

several meetings with FEC officials to gain an understanding of whether privacy controls were in 

existence and workng effectively at the FEC. The 

meetings included discussions about whether draft 

policies and procedures would be progressed to 

final before the auditors began audit fieldwork. 

Following the meetings, the OIG formulated an audit 

methodology and statement of work that enabled 

the OIG to evaluate proposals to select an independent public accounting firm to conduct the audit.

The OIG selected Cotton & Company as the independent contractor to conduct a performance audit 

of privacy and data protection policies and procedures and, specifically, to determine if the FEC is 
Office of Inspector General Semiannual Report to Congress

8

As part of the OIG’s audit contract with Cotton & 

Company, and to further expand on the findings and 

recommendations contained in the report, Cotton 

& Company conducted a post audit presentation 

with FEC officials. The OIG coordinated a management briefing which included the Commissioners, 

Staff Director, General Counsel and Chief Financial 

Officer. While the OIG initially planned for the contractor to discuss the audit report, the presentation 

was expanded to a high-level discussion of public 

and private sector control frameworks.

On January 15, 2008, the OIG received a draft corrective action plan (CAP) from management. The 

OIG provided management with detailed written 

comments on February 1, 2008. The OIG received a 

revised CAP on March 21, 2008.
October 1, 2007 - March 31, 2008

9

OIG hotline Information

The Office of Inspector General established a hotline 

to enable employees and others to have direct and 

confidential contact with the OIG. The OIG receives 

complaints through various means such as U.S. 

mail, telephone, e-mail, and personal visits to the 

OIG. Once a hotline complaint has been received, 

a preliminary inquiry is conducted. When the inquiry 

has been completed, the hotline complaint can be 

closed with no further action taken, referred to management for action, or closed and an investigation 

opened on the issue.

In response to a Federal Acquisition Regulation 

(FAR) requirement to increase fraud awareness at 

federal agencies, the OIG created a fraud hotline 

poster. The purpose of the OIG fraud hotline poster 

is to provide an increased awareness to FEC employees and contractors on fraud awareness and 

how to report fraud, waste, abuse and mismanagement to the OIG. Meetings were held with the 

FEC’s Contracting Officer and the lead Information 

Technology Division manager responsible for ITD 

contracts to discuss the placement of the poster 

throughout the FEC building, to include workspace 

occupied by FEC contractors. In addition to placement of the poster throughout the building, the electronic version of the hotline poster will be posted on 

the OIG’s website and available for download.

During the reporting period of October 1, 2007 

through March 31, 2008, the OIG had a total of 10 

hotline complaints at different stages – 8 are pending; 

2 are in progress.
Office of Inspector General Semiannual Report to Congress

10

The OIG previously reported on a closed investigation involving allegations of misconduct by several 

former senior management officials. In the OIG’s 

semiannual report to Congress for the period ending 

September 2006, the OIG reported on the closure of 

the investigation that involved various allegations of 

misconduct, to include a violation of a criminal conflict of interest. As previously reported, in September 

2006, the U.S. Attorney’s Office for the District of 

Columbia ultimately declined to prosecute the primary subject of the investigation. Except for one employee, all of the subjects of the investigation retired, 

separated, or were terminated from the agency.

During the current semiannual period, management 

informed the OIG that action had been taken concerning the remaining employee. With the exception 

of a planned OIG follow-up to ensure administrative 

improvements occurred related to the FEC’s equal 

employment opportunity and internal control programs, the OIG considers the matter closed.

Currently the OIG has one investigation open.

OIG investigations
October 1, 2007 - March 31, 2008

11

Besides conducting audits, inspections, and investigations, the OIG performs, and is involved in an array of additional projects and activities. As required 

by the Inspector General Act of 1978, as amended, all legislation compiled by the Commission’s 

Congressional Affairs office is reviewed by the 

Inspector General. The Inspector General also 

reviews and provides comments, when appropriate, on all legislation provided by the PCIE/ECIE 

Legislative Committee. In addition, the Inspector 

General routinely reads all Commission agenda 

items. The OIG engaged in an array of activities during the past six months – following are examples of 

those additional activities:

● Inspectors General conduct audits in accordance with generally accepted government auditing standards (GAGAS). Audit organizations 

conducting audits in accordance with GAGAS 

are required to have an independent peer review every three years. The OIG completed the 

peer review of the Federal Housing Finance 

Board (FHFB). The objective of the peer review 

program is to ensure an audit organization’s 

internal quality control system adequately provides reasonable assurance that applicable auditing standards, policies, and procedures are 

being followed. The OIG contacted the FHFB 

to obtain their most recent semiannual reports 

to assess the volume of audits selectable for 

peer review. An entrance meeting was held and 

fieldwork was initiated.

The fieldwork was conducted using a remote 

log-in to the FHFB Teammate audit files. On 

December 5, 2007, a final draft report was presented and the formal written response was 

provided by the FHFB IG on December 28, 

2007. The report and supporting exhibits were 

finalized and forwarded to the FHFB OIG and 

the ECIE on January 9, 2008.

● This reporting period, the OIG was required to 

have a peer review conducted on its audit operations. The Appalachian Regional Commission 

(ARC) Office of Inspector General conducted 

a peer review on the FEC OIG. An entrance 

conference was held and the majority of the 

fieldwork was conducted at the FEC. The final report was provided to the OIG on March 

28, 2008 and contained an unqualified (clean) 

opinion.

● In December 2007, the OIG initiated audit 

follow-up verification activity for the Transit 

Benefit Audit released February 2007. The OIG 

met with management on February 20, 2008 

to determine the status of open recommendations. We were unable to get an updated status 

at that time but eventually received an updated 

corrective action plan (CAP) from management 

on March 14, 2008. The OIG attempted to verify 

whether the actions had been fully implemented and therefore corrected the deficiencies described in the findings. Because management 

did not provide the CAP by the requested date, 

the OIG was unable to complete verification activities prior to cut-off for semiannual reporting 

for the three recommendations management 

put forth as fully implemented. Further, initial 

implementation verification activity performed 

does not support recommendation closure.

● The OIG worked with the FEC’s Webmaster to 

implement requirements of Section 746 of the 

Consolidated Appripriations Act, 2008 (H.R. 

2764). Specifically, a direct link to the Inspector 

General’s web page was added to the FEC’s 

Internet home page to allow individuals quick 

and simple access to the OIG’s web page. In 

addition, a new e-mail subscription service was 

Additional OIG Activity
Office of Inspector General Semiannual Report to Congress

12

added to the OIG’s web page to allow individuals to be automatically informed about the release of new OIG reports. Since launching the 

new e-mail subscription service in early 2008, 

nearly 100 individuals have subscribed to the 

new OIG service.

● The Office of Management and Budget (OMB), 

issued memoranda in 2006 and 2007, which 

recommend agencies establish a core management group and policy to respond to the loss 

of certain categories of sensitive and personal 

information. The team is composed of the Staff 

Director, Chief Information Officer, Inspector 

General, General Council, Associate General 

Council for Law & Advice, and the Information 

Systems Security Officer. This team is convened to conduct an initial evaluation of any 

potential breach. There was one potential issue 

reviewed this reporting period.

● The OIG received a letter from the 

Honorable Henry A. Waxman, U.S. House of 

Representatives, requesting a list of recommendations, made by the OIG from January 1, 2001 

to present, that have not been implemented by 

Congress or agency officials. The OIG provided 

Representative Waxman with a list of outstanding recommendations from 2006 to present as 

the FEC has implemented all recommendations 

the OIG made prior to 2006. A brief summary 

of each audit was provided along with an accompanying chart that contained the outstanding recommendations and a short summary of 

each recommendation.

● The Federal Election Commission is transitioning to a Line of Business (LOB) and the 

Inspector General met with the Chief Financial 

Officer and the Accounting Officer to discuss 

the status of the transition.

● The Inspector General, along with the Staff 

Director, General Counsel, and Chief Financial 

Officer, hold weekly meetings to discuss various 

Commission issues and interactions between 

their respective areas.

● The FEC recently launched an Intranet to provide FEC employees with a forum for sharing and accessing information. The Inspector 

General was interviewed and provided information on the duties of the Inspector General 

and how the OIG operates. The IG was also 

featured on the Intranet as one of the Women 

of the FEC.

● As a result of a significant increase in workload over the last several years, the OIG was 

granted additional hiring authority in late 2007. 

The OIG determined a new staff auditor and 

IG Counsel position are necessary to respond 

to the increased workload. The OIG devoted a 

significant amount of time during the first quarter on the hiring process. Because the two additional positions are newly created positions, 

the OIG created position descriptions for the 

staff auditor and IG Counsel positions. In addition, the OIG worked on a recruitment strategy 

during the quarter, to include employment advertisements in newspapers and online employment Websites. The OIG also met with the 

FEC HR office several times to discuss recruitment of the two new OIG positions. Lastly, the 

OIG started a review in March 2008 of the resumes received in response to the employment 

advertisements.

● The OIG worked on finalizing its record retention and disposition schedule to be submitted to the National Archives and Records 

Administration (NARA) for approval. The purpose of the record retention and disposition 

schedule is to list the types of records maintained by the OIG and the time period after 

which destruction or permanent retention is 

authorized. The record retention schedule will 

also provide for the transfer of inactive records 

from the OIG to an off-site records center. 

The OIG met with the FEC’s records contractor to discuss the OIG’s draft record retention 

and disposition schedule. The FEC contractor 

agreed to provide the draft schedule to NARA 

for review and approval. Furthermore, to reduce 

the level of paper records stored in the OIG file 

room, the OIG initiated a scanning project. To 

date, all of the 2004 Financial Statement Audit 

records have been converted to electronic 

format.
October 1, 2007 - March 31, 2008

13

ECIE and PCIE Activity

The President’s Council on Integrity and Efficiency 

(PCIE) and the Executive Council on Integrity and 

Efficiency (ECIE) were established May 11, 1992 by 

Executive Order 12805, and are chaired by the Office 

of Management and Budget, Deputy Director for 

Management. In addition to the Inspectors General, 

the councils include representatives from the Office 

of Personnel Management, the Office of Government 

Ethics, the Office of Special Counsel, and the 

Federal Bureau of Investigations.

The PCIE/ECIE have identical functions and responsibilities to coordinate and enhance governmental 

efforts to promote integrity and efficiency, and to detect and prevent fraud, waste and abuse in Federal 

programs. The PCIE is comprised of IGs appointed 

by the President of the United States and confirmed 

by the Senate. The ECIE consists of IGs appointed 

by the heads of their respective agencies.

The Inspector General is an active member of the 

Executive Council on Integrity and Efficiency and has 

provided input on a number of initiatives proposed by 

the Council. The IG also participates in joint meetings and activities with the President’s Council on 

Integrity and Efficiency.

Due to potential passage of legislation affecting the 

Inspector General community, the PCIE and the 

ECIE formed a committee composed of four IGs 

from the PCIE and four IGs from the ECIE to assist 

in the transition and to decide what steps need to be 

taken by the community if a bill passes. The FEC IG 

is an ECIE representative to the transition committee. During the last several months, the committee 

met four times to discuss issues related to combining 

the two IG councils. Some of the other issues discussed concern the election of the chair, committee 

structure and a charter.

The IG chaired two ECIE meetings and attended two 

PCIE meetings at the request of the ECIE Vice Chair 

who was unable to attend.

The IG provided comments to the ECIE on a Senate 

Committee report concerning the legislation affecting the IGs, specifically on the subject of ECIE 

compensation. The IG also provided comments on 

the Annual Report to the President prepared by the 

Inspector General community.
Office of Inspector General Semiannual Report to Congress

14

Reporting Requirements 

Reporting requirements required by the Inspector General Act of 1978, as amended by the Inspector General 

Act Amendments of 1988 are listed below:

IG Act Description Page

Section 4(a)(2) Review of Legislation 11

Section 5(a)(1) Significant Problems, Abuses, and Deficiencies None

Section 5(a)(2) Recommendations with Respect to Significant Problems, Abuses,

and Deficiencies

None

Section 5(a)(3) Recommendations Included in Previous Reports on Which Corrective 

Action Has Not Been Completed (Table III)

17

Section 5(a)(4) Matters Referred to Prosecuting Authorities None

Section 5(a)(5) Summary of Instances Where Information was Refused None

Section 5(a)(7) Summary of Significant Reports 5

Section 5(a)(8) Questioned and Unsupported Costs (Table I) 15

Section 5(a)(9) Recommendations that Funds be put to Better Use (Table II) 16

Section 5(a)(10) Summary of Audit Reports issued before the start of the Reporting Period 

for which no Management Decision has been made

N/A

Section 5(a)(11) Significant revised Management Decisions N/A

Section 5(a)(12) Management Decisions with which the Inspector General is 

in Disagreement

None
October 1, 2007 - March 31, 2008

15

TABLE I

INSPECTOR GENERAL ISSUED REPORTS WITH QUESTIONED COSTS 

(DOLLAR VALUE IN THOUSANDS)

Number Questioned 

Costs

Unsupported 

Costs

A. For which no management decision has been made by 

commencement of the reporting period

0 0 [0]

B. Which were issued during the reporting period 0 0 [0]

Sub-Totals (A&B) 0 0 [0]

C. For which a management decision was made during 

the reporting period

 0 0 [0]

(i) Dollar value of disallowed costs 0 0 [0]

(ii) Dollar value of costs not disallowed 0 0 [0]

D. For which no management decision has been made by 

the end of the reporting period

0 0 [0]

E. Reports for which no management decision was made 

within six months of issuance

0 0 [0]
Office of Inspector General Semiannual Report to Congress

16

TABLE II

INSPECTOR GENERAL ISSUED REPORTS WITH RECOMMENDATIONS THAT 

FUNDS BE PUT TO BETTER USE

Number Dollar Value

(In Thousands)

A. For which no management decision has been made by the 

commencement of the reporting period

0 0

B. Which were issued during the reporting period 0 0

C. For which a management decision was made during the reporting period

0 0

(i) dollar value of recommendations were agreed to by 

management

0 0

based on proposed management action 0 0

based on proposed legislative action 0 0

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

management

0 0

D. For which no management decision has been made by the end 

of the reporting period

0 0

E. Reports for which no management decision was made within 

six months of issuance

0 0
October 1, 2007 - March 31, 2008

17

TABLE III

SUMMARY OF AUDIT REPORTS WITH CORRECTIVE ACTIONS OUTSTANDING FOR MORE 

THAN SIX MONTHS

Financial Statement Audits

Recommendations

Fiscal Year Report 

Number

Repeat* New Closed Total

Fiscal Year 2004 OIG-04-01 0 42 12 30

Fiscal Year 2005 OIG-05-01 30 11 15 26

Fiscal Year 2006 OIG-06-02 26 13 10 29

*Repeat column represents recommendations from the prior fiscal year report that are still applicable to 

the current fiscal year report.

Recommendations

Report Title Report 

Number

Issue 

Date

Number Closed Open

Audit of the FEC’s Employee 

Transit Program

OIG-06-01 02/07 25 3 22
Office of Inspector General Semiannual Report to Congress

18

FEC / OIG Strategic Plan - Fiscal Years 2005 - 2010

OIG Products: To provide products

and services that promote positive

change in FEC policies, programs, and

operations.

OIG Process: To develop and implement

processes, policies, and procedures to ensure

the most effective and appropriate use of OIG

resources in support of our people and

products.

Objective A: Deliver timely, high-quality

products and services that promote

positive change.

Strategy:

- establish common OIG standards for communicating

results;

- conduct quality assurance programs;

- solicit appropriate internal and external review and

comment;

- comply with applicable statutory guidelines and

standards;

- set realistic and appropriate milestones.

Objective B: Address priority issues

and concerns of the Commission,

Management, and Congress.

Strategy: Perform work that supports;

- Federal Election Commission and Congressional

priorities;

- Strategic Management Initiative efforts;

Focus OIG attention in the following areas of

emphasis:

- managing change;

- resource allocation in relation to policy objectives;

- delivery of client service;

- causes of fraud and inefficiency; and,

- automation and communication.

OIG Staff: To maintain a skilled and motivated

work force in an environment that fosters

accountability, communications, teamwork, and

personal and professional growth.

Objective A: Maintain a dynamic strategic

planning process.

Strategy:

- periodically review and update the strategic plan to

address changing OIG and FEC priorities; and,

- identify factors that influence organizational change

and develop short and long term plans to address them.

Objective A: Attract and retain well-qualified,

diverse and motivated employees.

Strategy:

- develop and implement a comprehensive recruiting program

that attracts a broad population with the knowledge, skills,

abilities, and expertise necessary to make meaningful

contributions to the OIG;

- assess employee satisfaction and develop strategies to

address employee concerns;

- identify reasons for staff departures and develop plans to

foster greater staff retention; and,

- adhere to EEO principles and strive to maintain a diverse work

force.

Objective B: Plan and conduct costeffective work that address critical issues

and results in positive change.

Strategy:

- solicit FEC and Congressional input in planning OIG

activities;

- develop internal planning mechanisms to support FEC

goals and priorities;

- ensure that priorities of IG are effectively

communicated; and,

- identify specific targets for OIG review that are the most

cost-effective

Objective B: Provide training and

developmental opportunities to employees.

Strategy:

- assess training needs in relation not only to employee but also

office needs as well;

- ensure that Government Auditing Standards in relation to

training are adhered to; and,

- maintain a reporting system to ensure that educational

requirements are met.

Objective C: Follow-up and evaluate

results of OIG products and services to

assess their effectiveness in promoting

positive change.

Strategy:

- Identify, as appropriate, lessons learned to improve

timeliness and quality; and,

- conduct follow-up reviews to determine if intended

results have been achieved.

Objective D: Satisfy customers,

consistent with the independent nature

of the OIG.

Strategy:

- establish professional communication and

interaction with customers to promote the open

exchange of ideas;

- incorporate customer feedback, as appropriate; and,

- be open to customer-generated solutions and

options.

Objective C: Identify customer needs and

provide products and services to meet

them.

Strategy:

- establish new customer feed back mechanisms;

- consider and evaluate customers feedback when

planning and developing products and services;

- respond to Congressional inquires and request for

briefing and testimony;

- promote open exchange of ideas and information

through outreach and through use of e-mail; and,

- receive, evaluate, and respond, as appropriate, to

information received through the OIG hotline and other

sources.

Objective D: Implement efficient, effective,

and consistent resolution and follow-up

procedures.

Strategy:

- ensure that IG follow-up procedures are followed and

that management is aware of their role in the process;

- establish common OIG standards for terminology, date

maintenance and communications.

Objective E: Establish a positive and

productive working environment.

Strategy:

- reengineer or streamline OIG procedures to achieve the

most effective use of resources; and,

- ensure that necessary technologies, evolving and

otherwise, are made available to staff as needed.

Objective C: Assess, recognize, and reward,

when possible, performance that contributes to

achieving the OIG mission.

Strategy:

- develop and articulate expectations for each employee's

performance, including contributions in meeting the mission &

goals of the OIG; and,

- ensure that rewards, when possible, are given in recognition of

exceptional employee performance.

Objective D: Create and maintain a working

environment that promotes teamwork and

effective communication.

Strategy:

- ensure that communication between employees is open;

- provide employees with the tools and incentives they need to

adequately perform their duties.

Performance Measures: Determine the

timeliness and quality of products and

services; their effectiveness in

promoting positive change; and, reach

agreement with management on at least

90% of recommendations within six

months of the report issue date.

Performance Measures: An annual audit

plan is issued; strategic plan is periodically

reviewed; and, necessary technology is

provided to staff to enable them to most

efficiently perform their duties.

Performance Measures: All employees meet

the training requirements; all employees have

performance standards; and all employees

meet the basic requirements for the position in

which they were hired to perform.

 __________________________________________________________________________________ Semiannual Report to Congress Page 26 October 1, 2007 – March 31, 2008 

OIG Strategic Plan - Fiscal Years 2005 – 2010
October 1, 2007 - March 31, 2008

19

Month Contacts OIG

Action

No Action

Necessary

Forwarded 

for Action

October 81 2 77 2

November 72 3 68 1

December 90 2 84 4

January 109 2 104 3

February 196 4 178 14

March 237 3 229 5

TOTAL 785 16 740 29

OIG Contacts

The table below is a breakdown of the total amount of contacts received by the Office of Inspector General for 

the past six months – October 1, 2007 through March 31, 2008. These contacts were made through various 

sources such as telephone calls, personal visits to the OIG, e-mails, faxes, and U.S. Mail:
Office of Inspector General Semiannual Report to Congress

20

List of Training, Meetings 

and Conferences

The chart listed below depicts training, meetings, programs, seminars, and/or conferences attended by the 

Inspector General and/or the OIG staff for the period October 1, 2007 – March 31, 2008.

Host/Sponsor Topic/Subject

ECIE Monthly Meetings

PCIE Financial Statement Audit Network Meetings

Assistant Inspector General for Investigations (AIGI) Quarterly Meeting

Project on Government Oversight Met with POGO Committee to discuss IG study

U.S. Senate

Met with Senate staff members to discuss IG 

Legislation

U.S. House Met with a Congressional staff member to discuss 

ECIE Pay Issues

PCIE / GAO Financial Statement Audit Conference

Executive Women in Government 2008 Summit / Conference

Association of Government Accountants Meet the Financial Policy Makers Seminar

Council of Counsels to Inspectors General Freedom of Information Act (FOIA) Seminar

Federal Election Commission 

Preventing Violence in the Workplace Seminar

Disability and Reasonable Accommodations Seminar

Misconduct in the Federal Workplace: Keys to 

Effective Disciplinary Investigations Presentation

GAO Strategic Planning Presentation

Department of Defense / Department of Homeland 

Security

Financial Management Transformation and Risk 

Management Control Session

Association of Government Accountants Forum on Emerging Issues in Government Financial 

Management

Association of Government Accountants Using Internal Controls to Improve Performance 

Training

Management Concepts Contracting Officer Representatives Training

American University Key Executive Leadership - Session One

Small Agency Council Federal Budget Process Training

U.S. Postal Service / OIG TeamMate Training
CONTACTING THE 

OFFICE OF INSPECTOR GENERAL

The success of the OIG mission to prevent fraud, waste, and abuse depends on the cooperation of FEC employees (and the public). There are several ways to report questionable activity. 

Call us at 202-694-1015 or toll-free 1-800-424-9530. A confidential or anonymous message can be left 24 hours a day/7 days a week.

Write or visit us - we are located at: Federal Election Commission

Office of Inspector General

999 E Street, N.W., Suite 940

Washington, D.C. 20463

Mail is opened by OIG staff members only.

You can also fax us at 202-501-8134 or contact us by e-mail at: oig@fec.gov.

Website address: http://www.fec.gov/fecig/fecig.shtml

Individuals may be subject to disciplinary or criminal action for knowingly making a false complaint or providing 

false information.