Department of Homeland Security 

The Preparedness Directorate’s Anti-Deciency 

Act Violations for Fiscal Year 2006 Shared 

Service Administrative Assessments 

OIG-12-21 December 2011 
Office O!I1l$pec:lor General

u.s. Department of Homeland 5«urity

Washington, DC 20528

Homeland

Security

DEC 2 7 2011

Preface

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was

established by the Homeland Security ACI a/2002 (Public Law 107-296) by amendment

to the /nspeclOr General ACI of1978. This is one ofa series of audit, inspection, and

special reports prepared as part of our oversight responsibilities to promote economy,

efficiency, and effectiveness within the Department.

This report addresses the former Preparedness Directorate's Anti-Deficiency Act

violations for shared and other administrative services. It is based on interviews with

employees and officials of relevant agencies and institutions, direct observations, and a

review of applicable documents.

The recommendations herein have been developed to the best knowledge available to our

office, and have been discussed in draft with those responsible for implementation. We

trust this report will result in more effective, efficient, and economical operations. We

express our appreciation to all ofthose who contributed to the preparation of this report.

Anne L. Richards

Assistant Inspector General for Audits
 

 

 

 

 

 

 

 

 

 

Table of Contents/Abbreviations 

Executive Summary .............................................................................................................1
 

Background..........................................................................................................................2
 

Results of Review ................................................................................................................3
 

Fiscal Year 2006 ADA Violations .................................................................................4 


Internal Controls ............................................................................................................7
 

Conclusion ...........................................................................................................................7
 

Recommendations................................................................................................................8
 

Management Comments and OIG Analysis ........................................................................9 


Appendices 

Appendix A: Purpose, Scope, and Methodology.......................................................11 


Appendix B: Management Comments to the Draft Report .......................................12 


Appendix C: Anti-Deficiency Act Violations ............................................................15 


Appendix D: Response to the Office of the Chief Financial Officer ........................17 


Appendix E: Major Contributors to this Report........................................................19 


Appendix F: Report Distribution ..............................................................................20 


Abbreviations 

ADA Anti-Deficiency Act 


A&E Assessment and Evaluations 


DHS Department of Homeland Security 


FY fiscal year 


GAO Government Accountability Office 


IAIP Information Analysis and Infrastructure Protection 


IPIS Infrastructure Protection and Information Security 


IAA interagency agreement 


M&A Management and Administration 


NPPD National Protection and Programs Directorate 


OCFO Office of the Chief Financial Officer 


OIG Office of Inspector General 


OMB Office of Management and Budget 


PR purchase requisition
 
OIG
 

Department of Homeland Security 

Office of Inspector General 

Executive Summary 

The fiscal year 2007 Department of Homeland Security 

Appropriations Bill Conference Committee report directed the 

Government Accountability Office and the Department of 

Homeland Security, Office of Chief Financial Officer, to review 

the Preparedness Directorate’s use of fiscal year 2006 program 

appropriations to fund shared services administrative transactions. 

According to the Government Accountability Office legal opinion 

letter, September 17, 2007, the Preparedness Directorate 

inappropriately pooled its appropriations to fund shared services 

transactions. Subsequently, the Department hired a contractor to 

conduct the review. The contractor identified 21 improper uses of 

program appropriations to fund shared services. The Department 

concluded that the improper uses were Anti-Deficiency Act 

violations totaling between $21.7 million and $28.3 million in 

fiscal year 2006. 

The objective of this audit was to determine whether the 

Preparedness Directorate violated the Anti-Deficiency Act when it 

used program appropriations to pay for crosscutting services such 

as training, facilities enhancements, and business office operations 

of mutual benefit to internal components and offices. We concur 

with the contractor’s methodology used to identify the potential 

Anti-Deficiency Act violations. 

We made four recommendations to the National Protection and 

Programs Directorate. The Office of the Under Secretary 

concurred with three of the recommendations. Written responses 

are summarized and evaluated in the body of this report and 

included in their entirety in appendix B. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 1 
Background 

The Department of Homeland Security (DHS) Information 

Analysis and Infrastructure Protection (IAIP) Directorate was 

reorganized and renamed the Preparedness Directorate in fiscal 

year (FY) 2006. During FY 2007, the Preparedness Directorate 

was further reorganized and renamed the National Protection and 

Programs Directorate (NPPD). 

According to the Government Accountability Office (GAO), the 

DHS FY 2006 congressional budget justification submitted prior to 

the reorganization, and as amended, was not sufficient to meet the 

new organizational requirements of the Preparedness Directorate’s 

Management and Administration (M&A) appropriation. The 

appropriation did not include enough funding to cover the costs of 

salaries, DHS shared service fees, and other administrative 

expenses. To meet the budget shortfall, the Preparedness 

Directorate elected to pool the M&A and Programs, Projects, and 

Activities appropriations to fund shared services and other 

administrative expenses. 

The FY 2007 DHS Appropriations Bill Conference Committee 

report directed GAO and the DHS Office of the Chief Financial 

Officer (OCFO) to review the Preparedness Directorate’s use of 

program appropriations to fund shared services. GAO issued a 

legal opinion dated September 17, 2007,1

 that the Preparedness 

Directorate improperly pooled program appropriations to fund 

shared service transactions and recommended that DHS adjust the 

affected appropriations and report any Anti-Deficiency Act (ADA) 

violations, as required by 31 U.S.C. § 1351. DHS hired a 

contractor to conduct an internal review to determine whether 

shared services were funded inappropriately and to identify 

potential ADA violations. 

On November 26, 2008, the contractor completed its review and 

provided the results to DHS OCFO. OCFO evaluated the results 

and incorporated certain of the contractor’s conclusions in a 

preliminary review report, dated December 17, 2008, to the Chief 

Financial Officer. DHS concluded that the Preparedness 

Directorate violated 31 U.S.C. § 1341(a)(1)(A) (a provision of the 

1

 GAO, B-308762, Department of Homeland Security’s Use of Shared Services within the Preparedness 

Directorate. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 2 
ADA),

2

 31 U.S.C. § 1301(a)3 (also known as the “purpose 

statute”), and 31 U.S.C. § 1517(a)4

 when it inappropriately used 

between $21.7 million and $28.3 million in FY 2006 program 

appropriations to fund shared administrative services. DHS also 

determined that the Preparedness Directorate’s controls and control 

policies were insufficient at the time of the ADA violation. 

On September 14, 2009, DHS requested that the Office of 

Inspector General (OIG) independently determine whether the 

Preparedness Directorate violated the ADA, and requested that 

OIG identify the following: 

 Title and Treasury symbol of the fund or appropriation 

account 

 Violation amount and date 

 Who was at fault for the violation 

 Type of violation 

 Primary reason or cause for the violation 

 Statement regarding the adequacy of the system of 

administrative control 

 An analysis of the action taken to prevent recurrence of the 

same type of violation. 

Results of Review 

During FY 2006, the Preparedness Directorate improperly used program 

appropriations to fund shared services in excess of available appropriations. 

Although the directorate had authority to pool appropriations to fund shared 

services, it did not enter into valid Economy Act agreements and did not properly 

record allocated charges against each benefiting appropriation, as required by the 

account adjustment statute, 31 U.S.C. § 1534. According to GAO, the DHS 

FY 2006 congressional budget justification submitted prior to the reorganization, 

and as amended, did not contain sufficient funding to meet the Preparedness 

Directorate’s M&A requirements. 

We were unable to obtain all of the Preparedness Directorate’s accounting and 

contracting records supporting the shared services transactions. As a result, we 

examined the DHS contractor’s methodology and supporting documentation for 

2 Prohibits an expenditure or obligation exceeding an amount available in an appropriation for that 

expenditure or obligation. 3

 Appropriations shall be applied only to objects for which the appropriations were made except as 

otherwise provided by law. 4

 Prohibits making or authorizing an expenditure or obligation exceeding an apportionment or 

reapportionment, or the amount permitted by regulation. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 

Fiscal Year 2006 Shared Service Administrative Assessments 

Page 3 
identifying 21 potential ADA violations during FY 2006. We concurred with the 

contractor’s methodology used to identify the purpose and use of Preparedness 

Directorate’s program appropriations. However, DHS did not have the 

documentation necessary for us to fully conduct our review. We were unable to 

extend our audit procedures beyond the contractor’s work to identify which 

appropriations should have been charged, how much the separate appropriations 

may have benefited from amounts expended, and whether additional parties were 

responsible for the identified ADA violations. We recommend that DHS report 

21 violations totaling approximately $28 million. To the extent that any of the 21 

expenditures should have been charged to the Infrastructure Protection and 

Information Security (IPIS) M&A and the Preparedness Directorate’s M&A 

accounts, we recommend that NPPD make adjustments to charge those accounts, 

and return any available funds to the program appropriations improperly used. 

NPPD was unable to provide documentation that the Preparedness Directorate had 

internal controls that complied with financial and appropriation law and 

regulations. Further, NPPD has not designed effective controls to ensure 

compliance with appropriations law and financial regulations. As a result, we 

were not able to analyze the actions taken by NPPD to prevent recurrence of the 

same type of violation and did not test for violations in subsequent years. We 

recommend that NPPD develop and implement effective controls to ensure 

compliance with appropriations law and other financial regulations, and test for 

violations in subsequent years. 

Fiscal Year 2006 ADA Violations 

Purchase requisitions (PRs) for shared services activities were not readily 

identifiable in the Federal Financial Management System or in PRISM. 

As a result, the DHS contractor identified potential shared service ADA 

violations during FY 2006 by examining known shared services 

organization locations and PR categories. Based on these selection 

criteria, the contractor reduced the number of transactions for review from 

50,788 to 123, and the PRs from 808 to 35. These 123 transactions and 35 

PRs were evaluated to determine whether program appropriations were 

improperly used to fund shared services. 

The contractor examined PRs, contracts and interagency agreements 

(IAAs), statements of work, and PR print screens to determine whether 

shared services transactions were authorized and properly funded. NPPD 

was unable to provide documentation necessary to extend our audit 

procedures beyond what the contractor had already identified as selection 

criteria. As a result, we limited our audit procedures to potential ADA 

violations identified by the contractor. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 4 
To determine whether program funds were properly used to fund shared 

services transactions, DHS’ contractor tested key data to verify— 

Proper consistency throughout the supporting documentation, 

Reasonable amounts throughout the funds control life cycle, 

Funding utilized from the appropriate year, and 

Funds expended for the purposes for which they were appropriated.

The contractor determined that 21 PRs totaling $28,273,975 had no 

documentation to support the use of IPIS and Assessment and Evaluations 

(A&E) program appropriations for the shared services. The contractor 

recommended that the accounts be adjusted to charge those obligations 

against the IPIS M&A appropriation, and that any available funding be 

returned to the IPIS and A&E appropriations. Of the 21 ADA violations 

identified, 18 were for shared services, 2 were for facilities build-out, and 

1 was for miscellaneous services. Although we agree with the contractor’s 

methodology for identifying potential ADA violations, we do not agree 

that all 21 are chargeable to the IPIS M&A appropriation, because the 

documentation provided does not support that conclusion. It appears that 

certain of the PRs could have been charged to the IPIS M&A account, but 

some could have been charged to the Preparedness Directorate’s M&A 

account instead. The ADA5 requires U.S. government employees to limit 

expenditures to the amounts authorized in appropriations. Agency heads 

must promptly report violations to the President, Congress, and the 

Comptroller General.6 See appendix C for a list of the ADA violations, 

totaling $28.3 million, that must be reported to the appropriate authorities. 

The ADA violations occurred because the Preparedness Directorate’s 

Director of Business Operations improperly used IPIS and A&E program 

appropriations. The directorate used those funds to pay for purportedly 

shared services costs even though they were not available for that purpose. 

Further, there was no documentation to show that the IPIS and A&E 

programs benefited from the services it paid for. Thus, although each 

program could have used its funds to pay for administrative services that it 

received, it could not augment another appropriation by using its funds to 

pay for services provided to and received by another program. This 

inappropriate use of funds violated 31 U.S.C. §§ 1301 and 1341(a). The 

Preparedness Directorate spent money for purposes for which no 

appropriations were available and did not subsequently adjust its accounts 

to remedy the improper expenditures. In addition, these transactions 

5 31 USC § 1341(a), “An officer or employee of the United States government...may not make or authorize 

an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure 

or obligation.” 6 31 USC § 1351; Office of Management and Budget (OMB) Circular A-11, Section 145. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 

Fiscal Year 2006 Shared Service Administrative Assessments 

Page 5 
violated 31 U.S.C. §1532 and section 503 of the FY 2006 DHS 

Appropriations Act, P. L. 109-90, and thus constituted unlawful transfers, 

which the Preparedness Directorate did not remedy. The contracting 

officers and the deputy chief of staff who approved the administrative 

contracts and IAAs that were funded with program appropriations are also 

responsible for the ADA violations. 

Some key Preparedness Directorate personnel were no longer accessible, 

and DHS was unable to provide all the Preparedness Directorate 

documentation. The Preparedness Directorate’s records of financial 

decisions as well as some personnel records were unavailable during our 

review. For example, we were unable to obtain all financial data and 

contracting documentation for the directorate’s shared services 

assessments, records of the decision to fund shared services with program 

appropriations, and the minutes from meetings in which the DHS Office of 

the General Counsel discussed reorganizational resource problems with 

the directorate. Further, position descriptions were not available for 

various Preparedness Directorate personnel, including financial 

management and budget execution staff. As a result, we were unable to 

determine whether additional ADA violations existed and whether other 

individuals were responsible for the ADA violations. 

During the exit conference, Department officials expressed concern that 

OIG did not include senior Preparedness Directorate leadership as 

responsible parties for the ADA violation. In response, the Department 

provided additional documentation related to future budget planning. We 

also conducted an interview with an official who approved one of the 

administrative IAAs. The official indicated that she was verbally directed 

to sign the IAA and had a memorandum supporting this direction. 

However, the additional documents provided by the Department did not 

include a memorandum from senior Preparedness Directorate leadership 

that approved the use of program appropriations to fund shared services. 

As a result, OIG was unable to confirm that senior Preparedness 

Directorate officials were responsible for the ADA violations. 

Internal Controls 

NPPD was unable to provide documentation that the Preparedness 

Directorate had internal controls that complied with financial and 

appropriation law and regulations. 

An NPPD official indicated that, until recently, NPPD did not have the 

resources to develop and implement internal controls but it has started to 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


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hire and contract support to develop processes that address OMB Circular 

A-123, Management’s Responsibility for Internal Control.

7 This circular 

requires management to establish and maintain internal control to achieve 

the objectives of effective and efficient operations, reliable financial 

reporting, and compliance with applicable law and regulations. According 

to DHS, it has taken steps to improve NPPD’s compliance with 

appropriations law and financial regulations, including the following: 

 Testing Transactions: On December 19, 2007, DHS reported the 

results of tests of FY 2007 NPPD shared services purchase 

requisitions. Of the 69 purchase requisitions totaling $27.1 million 

tested, only 3 totaling $502,474 were not authorized to use 

program funds. 

 Issuing New Policies and Procedures: On February 12, 2010, DHS 

issued an OMB-approved Administrative Control of Funds policy, 

which establishes responsibility for the administrative control of 

funds and provides guidance for reporting ADA violations in 

accordance with OMB Circular A-11. 

 Conducting Training: According to DHS officials, the DHS 

General Counsel provided Appropriations Law 101 training to 

NPPD that addressed ADA violations; however, NPPD did not 

maintain attendance records for this training. 

NPPD has not established controls to ensure compliance with financial 

and appropriations law and regulations. Without these controls, NPPD 

remains at high risk of violating appropriation law and financial 

regulations. 

Conclusion 

We concur with DHS’ methodology used to identify potential 

ADA violations for the Preparedness Directorate’s shared services 

transactions that occurred during FY 2006. The Preparedness 

Directorate’s Business Operations Director improperly used 

program appropriations to fund administrative shared services 

when those funds were not available for that purpose. 

Furthermore, there is no evidence that the IPIS and A&E programs 

benefited from the services paid for by the directorate. The 

contracting officers and the deputy chief of staff who approved the 

7

 The circular provides guidelines to federal managers on improving the accountability and effectiveness of

federal programs and operations by establishing, assessing, correcting, and reporting on internal control. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 

Fiscal Year 2006 Shared Service Administrative Assessments 

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administrative contracts and IAAs that were inappropriately 

funded with program appropriations are also responsible for the 

ADA violations. 

NPPD has not developed and implemented controls for ensuring 

compliance with federal and departmental appropriation and 

financial requirements. NPPD has begun to implement processes 

that address OMB requirements, but has not developed formal 

policies and procedures. Without proper controls, NPPD remains 

at risk for violating appropriations law and incurring additional 

ADA violations. 

During our review, NPPD was unable to produce certain requested 

records from the former Preparedness Directorate. Thus, there may 

be additional ADA violations that we were unable to identify. 

Recommendations 

We recommend that the National Protection and Programs 

Directorate: 

Recommendation #1: To the extent that funds are available in the 

Preparedness Directorate’s M&A and the IPIS M&A accounts for 

any of the 21 PRs, adjust the expired appropriations to return the 

available funding to the improperly charged program appropriations 

before the accounts close on September 30, 2011. 

Recommendation #2: Report the FY 2006 Preparedness 

Directorate ADA violations that are not corrected to the President, 

Congress, and the DHS Secretary in compliance with ADA 

reporting requirements. For each violation, the report should 

include title and Treasury symbol (including fiscal year) of the 

appropriation account, the amount involved, the date the violation 

occurred, the name of the official responsible for the violation, the 

type of violation, and the primary reason or cause. 

Recommendation #3: Develop and implement controls to ensure 

compliance with appropriations law and other financial regulations. 

Recommendation #4: Conduct reviews of NPPD’s shared 

services transactions for FYs 2007 to 2010, and identify and report 

any ADA violations according to OMB Circular A-11. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


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Management Comments and OIG Analysis 

We obtained written comments on a draft of this report from the 

DHS Under Secretary for NPPD, and have included a copy of the 

comments in appendix B. NPPD concurred with three of our four 

recommendations and provided comments to all four 

recommendations. We summarize and address these comments 

below. 

Response to Recommendation #1 

NPPD concurred. NPPD indicated that it is unable to make the 

recommended adjustments because as of September 30, 2011, the 

accounts involved have closed. 

OIG Analysis 

In accordance with fiscal law, the accounts remained open until 

September 30, 2011. Due to the closed status of the involved 

accounts, no further action is necessary, and we consider this 

recommendation closed. 

Response to Recommendation #2 

NPPD concurred. NPPD indicated that the ADA violations will be 

reported in accordance with OMB Circular A-11. 

OIG Analysis 

We consider NPPD’s proposed action responsive to the 

recommendation and consider the recommendation resolved and 

open until the ADA violations are reported to the appropriate 

officials according to OMB Circular A-11. 

Response to Recommendation #3 

NPPD concurred. It indicated that it has taken actions to ensure 

compliance with appropriations law and financial regulations, 

including fully staffing the Directorate’s financial management 

positions. 

OIG Analysis 

In its response, NPPD noted actions it has taken to strengthen 

controls to address the findings in the report. However, we 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 9 
consider this recommendation unresolved and open until NPPD 

provides an analysis of controls in place to prevent further ADA 

violations, copies of standard operating procedures issued and 

implemented, and a plan to further develop and implement 

remaining procedures. 

Response to Recommendation #4 

NPPD did not concur. NPPD indicated that it does not believe that 

there was a significant risk of shared services–related violations 

from FY 2008 through FY 2010, and therefore it cannot justify the 

expenditure of resources to conduct the recommended reviews. 

NPPD explained that it has stopped pooling funds for shared 

services and has taken actions to strengthen its control 

environment. These actions include the assessment of its FY 2007 

shared services transactions, and the Department’s monitoring of 

the agency’s internal controls through the OMB A-123 process. 

OIG Analysis 

We agree that NPPD has taken actions to prevent further shared 

services violations. However, since NPPD has not fully developed 

and implemented controls to ensure compliance with financial and 

appropriations laws and regulations, it remains at risk of violating 

these requirements. The FY 2007 self-assessment referred to in 

NPPD’s response did identify three shared services transactions 

totaling $502,474 that were potential ADA violations. Therefore, 

the recommendation will remain open and unresolved until NPPD 

provides evidence supporting management’s determination on the 

FY 2007 potential ADA violations. Additionally, NPPD will need 

to provide evidence that it has conducted reviews of its shared 

services transactions for FYs 2008 through 2010 or that it no 

longer pools funds for shared services. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


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Appendix A 

Purpose, Scope, and Methodology 

Our objective was to determine whether the Preparedness 

Directorate violated the Anti-Deficiency Act in using program 

appropriations to pay for crosscutting services such as training, 

facilities enhancements, and business office operations of mutual 

benefit to multiple internal components and offices. 

Because the data for shared services transactions were not readily 

available, we examined the criteria used by the contractor, 

including the PRs, contracts and IAAs, statements of work, and 

print screens, verified the improper funding of shared services 

transactions, and determined who authorized the contractual 

obligations and IAAs for the ADA violations. 

We performed our audit between March and October 2010 at 

GAO, DHS NPPD, OCFO, and Office of the General Counsel in 

Washington, DC. We conducted the audit pursuant to the 

Inspector General Act of 1978, as amended, and according to 

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 upon our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for 

our findings and conclusions based upon our audit objectives. 

We would like to thank NPPD for the cooperation and courtesies 

extended to our staff during this review. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 11 
Appendix B 

Management Comments to the Draft Report 

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Wall ate., DC 2t51t

Homeland NOV - 3 2011 Security

Ms. Anne L. Richards

Assistant Inspector General for Audits

Office ofInspector General

U.S. DcpartmentofHomeland Security

245 Munay Lane, SW, Building 410

Washington, DC 20528-0305

Dear Ms. Richards:

Re: Office ofInspector General Draft Report. "The Preparedness Directorate 's AnIiDeficiency Violations/or Fiscal Year 2006 Shared Service Administrative Assessments"

(010 Project No. 10-064-AUD-NPPD)

1bank you for the opportunity to review and comment on this draft report. The Department of

Homeland Security (DHS)/NatioDal Protection and Programs Directorate (NPPD) appreciates the

Office ofInspector Oeneral's (OIO's) work in planning and conducting its review and issuing

this report, requested by the Department's Office ofthe ChiefFinancial Officer. The OIG

conducted this review to determine whether the fanner Preparedness Directorate violated the

Antideficiency Act (ADA) when it used program appropriations to pay for crosscutting services

such as training, facilities enhancemen1s, and business office operations ofmutual benefit to

internal components and offices.

This situation was tmique because the Preparedness Directorate was in existence for slightly

more than a year, and almost all ofthe Federal staffdeparted the organization upon

implementation ofthe Post Katrina Emergency Management Reform Act that disbanded the

Preparedness Directorate. As the OIG highlighted in the report. this made it extremely difficult

for the NPPD personnel who were not in place at the time the Preparedness Directorate

violations occurred to produce docwnentation on how the Preparedness Di.rectorate made

decisions to apply Administrative Assessments across the Preparedness Directorate offices.

Following is our response to the OIG's four recommendations.

Recommendation 1: To tlae extent that fundi are available ill the Preparedness

Directorate's MicA aDd the IPIS MicA a«ODD" for any ofthe 21 PRJ, adjust the esplred

appropriation. to return tile available fuading to the Improperly charged program

.ppropriatiODt before the accounts close on September 30, 2011.

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 12 
Appendix B 

Management Comments to the Draft Report 

Rupo : Concur. Under nomwl circwns1ances NPPD would make 1he recommended

adjustments to accounting records. However. NPPD is unable 1.0 do so since as of September 30,

2011, the accounts involved have closed (in accordance with fiscal law. the budget authority

expired five y prio to the end ofFY 201 t). Therefore, P i not planning any ·tiona!

actions on this recommendation.

eoda' 2: rt t • FY 2006 .8 lrectorate ADA vlolatio at

.re D.ot correct to tbe PreDde t, COlIlI'a.t lid e DH retary III eompHance with

ADA reportiDl require: eats, For eae "Uon, tle report should incla title aD

Treuury Iymb.l (iDdudiDtl the 1iIcaI year) oftile appropriatio acCOUIlt, e ."Ollllt

iDvolv the date tlae 'olallo , f til ftldal po I Ii

-iola '0 the type ofviolatioD, d thep' ary reaIOD or cause.

Reepo 0 cur. The A violations will be appropriately reported, in ac:c:ordance with lhc

Office ofManagement and Budget (OMB) Circular A·ll, and will include the name ofthe

official(s) responsible based on our ongoing review ofthe entire rcc;ord.

Reeo ..end 0 3: Deve op imp eat CODtro to caslin co plince witll

appropmtioBi law .Dd 0 er dalrepJad

RelpoIlIe: Concur, NPPD bas taken many ction.s since its inception in April 2001 (atwhich

time the Preparedness Directorate disbanded) to eosme compliance with appropriations law and

finane' reguI' 0 -. As ofJune 2011J 100 percent ofthe Directorate's authorized Fede

financial management positions were filled and internal control efforts strength cd.

NPPD h also i ued and implemented se Ilral relevant standard operating procedure and

several others are at various stages of devclopmeDt and implementation. For example. NPPD has

implemented Proceduresfor ReportingAntidejiciency Act Violations. ProceduresfOT Processing

PUTCh4,r, Requlsltlon.s and Obligatin. Documenls~ Procedures/or Invoice Processing,

p,.ocedure~'for Intra~GOYernmenJaJ Payment and Collection Processing. and Funds Control and

Fi1u:zncjaJ DocumentProcessing. Additionally. NPPD has increased its focus on monitoring

internal contro . This . tude· performing additional asse·' ts ofinternal controls over

fma:ncial repol1ing. documentiQg aDd updatiDg docwnen1ation on :financiallIl.8D8gcment

processes and mapping, and monitoring the implemeutation ofconective actions.

Reco .cadati 4: Coaduct review. ofNPPD'. - .- . _nice t ctlo lor FY.1OO7

to 2010, ad identify ad report any ADA violatioas accontiDl to OMB CireuJar A-H,

R.poue: NOD~ncur. The pooling offunds for shared services was unique to the fonncr

Preparedness Directorate and has not continued. Tbc same contractor that conducted the

IT2006 ADA ·ysi perfol1l1cd 811 es meal ofFY 2007 transactions. which confirmed

that PPO bad changed i -processes and that the practice ofpooling funds fo shared ices

had been discontinued.

NPPO bas made severa1 dler improvemelUS to streo&then its control· vironment, including

changes in NPPD's financial D:WIlIlgeIDentsenior-level staffia FY 2008.

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


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Appendix B 

Management Comments to the Draft Report 

Current NPPD leadership has implemented improved procedures and remains committed to

strengthening the control environment to lessen the possibility offuture ADA violations. In

addition, the Depamnent bas continued to monitor internal controls at NPPO through the OMB

A-123 process, including NPPO's assessments ofbudgetary resource and payment management

processes, and NPPO's implementation of corrective action plans when necessary.

Given these actions and a heightened commitment to a strong intemal control environment,

coupled with the results ofthe assessment of FY 2001 transactions, NPPO does not believe a

significant risk of a violation related to shared services baving occurred during FY 2008 through

FY 2010 exists. NPPO, therefore, cannot justify the expenditure ofincreasingly scarce resources

to conduct the recommended review given competing priorities and the overaU lack ofevidence

that any violations exist

Again, we thank. you for the opportunity to review and provide comment on this draft report, and

we look forward to working with you on future homeland security engagements.

Sincerely,

Rand

Ul;

Beers

Under Secretary

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


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Appendix C 

Anti-Deficiency Act Violations 

PR / Contract No. 

Obligated 

Amount 

Treasury Fund Title, 

Symbol, and Fiscal Year 

Program 

Name* 

Reason for 

Violation 

Program 

Code No. 

Violation 

Date 

1 

RPIT-06-00034 / 

HSHQDC06F00232 $2,128,480 NPPD IPIS 70X0565 06/07 NS/EP 

Shared Service 

Purpose Statue M6_4080.01 8/21/2006 

2 

RPIT-06-00035 / 

HSHQDC06F00337 $415,174 NPPD IPIS 70X0565 06/07 NS/EP 

Shared Service 

Purpose Statue M6_4080.01 9/29/2006 

3 

RPIT-06-00032 / 

HSHQDC06X00377 $561,000 NPPD IPIS 70X0565 06/07 CS 

Shared Service 

Purpose Statue M6_4070.01 5/31/2006 

4 

RIIT-06-00007 / 

HSHQPA05X00715/P00004 $4,264,520 NPPD IPIS 70X0565 06/07 PA 

Shared Service 

Purpose Statue M6_4050.04 5/24/2006 

5 

RPIT-06-00017 / 

HSHQPA05X01058 $2,375,774 NPPD IPIS 70X0565 06/07 CIOP 

Shared Service 

Purpose Statue M6_4060.12 7/18/2006 

6 

RPIP-06-00037 / 

HSHQPA06A00010 $2,374,026 NPPD IPIS 70X0565 06/07 CIIE 

Shared Service 

Purpose Statue M6_4020.01 9/30/2006 

7 RIBO-06-00002 / 

HSHQDC06F00061 $4,979,727 A&E IAIP 70 0911 05/06 

CIIE 

OUS 

M&A IT 

Shared Service 

Purpose Statue 

A5_4020 

SA_1010 

MA_1050 

4/7/2006 

8 

RPUS-06-00005 / 

HSHQDC06F00127 

$996,660 NPPD IPIS 70X0565 06/07 

CIIE 

CIOP 

OUS 

Shared Service 

Purpose Statue 

M6_4020.08 

M6_4060.12 

SA_1010 

8/4/2006 

9 RPUS-06-00012 / 

HSHQDC06J00445 $497,819 NPPD IPIS 70X0565 06/07 NS/EP Shared Service Purpose Statue M6_4080.01 9/29/2006 

10 

RPIT-06-0051 / 

RPIT-06-00033 / 

HSHQPC05FR00004 $694,000 A&E IAIP 70 0911 05/06 CIOP 

Shared Service 

Purpose Statue 

A5_4060.01 

7/6/2006 

11 / 

12 

RPIT-06-00015 / 

HSHQDC06J00187 

$3,795,085 

$586,000 

NPPD IPIS 70X0565 06/07 

A&E IAIP70 0911 05/06 

CIIE 

BIO 

NS/EP 

Shared Service 

Purpose Statue M6_4020.01 

A5_4040 

M6_4080.01 

8/8/2006 

13 

RPIT-06-00050 / 

HSSCHQ04F00761 $125,168 A&E IAIP 70 0911 05/06 BIO 

Shared Service 

Purpose Statue A5_4040 8/29/2006 

14 RPBO-06-00031 / 

HSHQDC06X00359 $188,758 A&E IAIP70 0911 05/06 BIO 

Shared Service 

Purpose Statue A5_4040 6/16/2006 

15 NFIC060016 / 

7042GT62400016 $2,300,000 A&E IAIP 70 0911 05/06 CIIE 

Facility Build-out 

Purpose Statue A5_4020.01 9/26/2006 

16 NIFC-06-10018 / N0034908 $1,600,000 NPPD IPIS 70X0565 06/07 NS/EP 

Facility Build-out 

Purpose Statue M6_4080.01 9/27/2006 

17 RIBO-06-00007 / 

HSHQDC06F00032 $70,000 A&E IAIP 70 0911 05/06 CAE 

Shared Service 

Purpose Statue A5_5010 12/19/2005 

18 

RPBO-06-00037A / 

HSHQDC06C00109 $165,000 NPPD IPIS 70X0565 06/07 CIOP 

Administrative 

Service Purpose 

Statue M6_4060 

9/26/2006 

19 

RPFI-06-00002 / 

HSSCHQ04A00519 

HSHQDC05J00159 $19,696 A&E IAIP 70 0911 05/06 CAE 

Shared Service 

Purpose Statue 

A5_5010 

2/6/2006 

20 

RPUS-06-00017 / 

HSHQDC06J00468 $40,348 NPPD IPIS 70X0565 06/07 CIOP 

Shared Service 

Purpose Statue M6_4060 9/29/2006 

21 RPBO-06-2000 / No Contract $96,740 NPPD IPIS 70X0565 06/07 

PA 

CIOP 

Shared Service 

Purpose Statue 

M6_4050 

M6_4060 9/30/2006 

$28,273,975 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 15
 
Appendix C 

Anti-Deficiency Act Violations 

* Note to Table 

Program Name Abbreviations: 

NS/EP – Telecommunications 

CS – Cyber Security 

PA – Protective Actions 

CIOP – Critical Infrastructure Outreach and Partnership 

CIIE – Critical Infrastructure Identification and Evaluation 

OUS – Office of the Under Secretary 

M&A IT – Management & Administration Information Technology 

BIO – Biosurveillance 

CAE – Competitive Analysis and Evaluation 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


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Appendix D 

Response to the Office of the Chief Financial Officer 

Below are our responses to the Office of the Chief Financial 

Officer’s ADA investigation request dated September 14, 2009. 

1.	 The title and Treasury symbol (including fiscal year) of the 

appropriation or fund account, the amount involved for 

each violation, and the date on which the violation 

occurred. 

See appendix C for each violation date, amount, and 

appropriation account title/Treasury symbol/fiscal year. 

2.	 A determination as to who was at fault for the violation, to 

include the name and position of all officers or employees 

responsible and all circumstances surrounding their 

involvement. 

We determined that the Preparedness Directorate Director 

of Business Operations inappropriately used program 

appropriations to fund shared services requirements, which 

caused the ADA violations. Additionally, we determined 

that the contracting officers and the deputy chief of staff 

who approved the shared services contracts and IAAs are 

responsible for the ADA violations. We will provide the 

names of these individuals under separate cover. 

3.	 All facts pertaining to the violation, including the type of 

violation, the primary reason or cause, any statement from 

the responsible officer(s) or employee(s) with respect to 

any extenuating circumstances, and any germane report by 

DHS and/or NPPD counsel. 

All 21 of the violations identified in appendix C are 

31 U.S.C. § 1301(a) and 31 U.S.C. § 1341(a) type 

violations. These ADA violations occurred because the 

Preparedness Directorate elected to inappropriately use 

program appropriations to fund a budget shortfall in shared 

service requirements. In addition, these transactions 

violated 31 U.S.C. § 1532 and section 503 of the FY 2006 

DHS Appropriations Act, P. L. 109-90, and thus constituted 

unlawful transfers, which the Preparedness Directorate did 

not remedy. 

DHS’ Preliminary Review of an Anti-Deficiency Act 

Violation, Preparedness Directorate – Shared Services 

memorandum, dated December 17, 2008, concludes that 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 17 
Appendix D 

Response to the Office of the Chief Financial Officer 

the Preparedness Directorate violated 31 U.S.C. § 1301(a), 

31 U.S.C. § 1341(a)(1)(A), and 31 U.S.C. § 1517(a) when 

it inappropriately used between $21.7 and $28.3 million in 

FY 2006 program appropriations to fund shared 

administrative services. DHS also concluded the 

Preparedness Directorate’s controls and control policies 

were insufficient at the time of the ADA violation. 

4.	 A statement regarding the adequacy of the system of 

administrative control prescribed by the DHS and 

approved by the Office of Management and Budget. 

Although DHS issued its Administrative Control of Funds 

policy on February 12, 2010, NPPD has not established 

controls to ensure compliance with financial and 

appropriations law and regulations. Without these controls 

in place, NPPD is at a higher risk of violating appropriation 

law and financial regulations. 

5.	 An analysis of any additional action taken by, or at the 

direction of, the Department of Homeland Security and/or 

NPPD, including new safeguards proved to prevent 

recurrence of the same type of violation. 

Although DHS has an Administrative Control of Funds 

policy, NPPD has not established controls to ensure 

compliance with appropriations law and financial 

regulations. Without proper controls in place, NPPD is at a 

higher risk of violating appropriation law and financial 

regulations. 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 18 
Appendix E 

Major Contributors to this Report 

John Shiffer, Audit Manager 

Sue Vernier, Auditor 

Jose Benitez-Rexach, Auditor 

Gary Alvino, Independent Referencer 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 19 
Appendix F 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretariat 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as 

appropriate 

The Preparedness Directorate’s Anti-Deficiency Act Violations for 


Fiscal Year 2006 Shared Service Administrative Assessments 


Page 20
 
 

 

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