Office of Inspector General

Program Summary by Budget Activity

Dollars in thousands

Appropriation FY 2011 FY 2012 FY 2013 FY 2012 TO FY 2013

 Enacted Enacted Request $ Change % Change

Audit $22,823 $22,823 $22,016 ($807) (3.5%)

Investigations $6,818 $6,818 $6,577 ($241) (3.5%)

Subtotal, Office of Inspector General $29,641 $29,641 $28,593 ($1,048) (3.5%)

Offsetting Collections - Reimbursables $8,000 $13,200 $15,400 $2,200 16.7%

Total Program Operating Level $37,641 $42,841 $43,993 $1,152 2.7%

Direct FTE 172 172 172 0 0%

Reimbursable FTE 19 19 19 0 0%

Total FTE 182 191 191 0 0%

Summary

The Inspector General Act of 1978, as 

amended, gives the Treasury Office of 

Inspector General (OIG) the authority and 

responsibility to (1) audit and investigate the 

Treasury Department’s programs and 

operations; (2) promote economy and 

efficiency and to detect and prevent fraud and 

waste in those programs and operations; and 

(3) keep the Secretary and Congress aware of 

problems and solutions.

The OIG provides independent oversight of 

the Department of the Treasury and all of its 

bureaus except the Internal Revenue Service 

(IRS) and activities related to the Troubled 

Asset Relief Program (TARP). The OIG has 

five components, including three mission 

offices – the Office of Audit, the Office of 

Investigations, and the Office of Small 

Business Lending Fund (SBLF) Program 

Oversight (separately funded through 2017). In 

support of Treasury’s strategic goal to Foster a 

Prudent Use of Taxpayer Resources to Operate 

the Federal Government, OIG has established 

the following strategic goals: Promote the 

integrity and effectiveness of Treasury 

programs and operations through audits and 

investigations; Proactively support and 

strengthen the Department’s ability to identify 

and manage challenges, both today and in the 

future; Fully and currently inform stakeholders 

of Treasury OIG findings, recommendations, 

investigative results, and priorities related to 

Treasury programs and operations, and; 

Enhance, support, and sustain a workforce and 

strengthen internal operations to achieve the 

Treasury OIG mission, vision and strategic 

goals.

The Fiscal Year (FY) 2013 President’s Budget 

request for the Treasury OIG will be used to 

fund critical audit, investigative, and support 

activities to meet the requirements of the 

Inspector General Act of 1978, the Federal 

Deposit Insurance Act, the Government 

Management Reform Act, the Federal 

Information Security Management Act 

(FISMA), the American Recovery and 

Reinvestment Act of 2009 (Recovery Act), the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act (Dodd-Frank Act), 

the Small Business Jobs Act of 2010, and 

others. Specific mandates include audits of the 

Department’s financial statements, the 

Department’s implementation of FISMA, and 

failed insured depositary institutions regulated 

by Treasury.
With the resources available after mandated 

requirements are met, the OIG will conduct 

audits and investigations of the Department’s 

highest risk programs and operations, as 

reported through a memorandum from the 

Inspector General to the Secretary of the 

Treasury on October 24, 2011. These include:

Programs that Support the Transformation of 

Financial Regulation - The Dodd-Frank Act 

established the Council of Inspectors General 

on Financial Oversight (CIGFO) and 

designated the Treasury Inspector General as 

Chair. The Council has statutory requirements 

to provide oversight of the Financial Stability 

Oversight Council (FSOC), which is chaired 

by the Treasury Secretary.

Management of Treasury’s Authorities to 

Support and Improve the Economy - The 

Recovery Act provided Treasury with 

approximately $24 billion in non-IRS funding 

for low-income housing projects and specified 

energy properties for which the OIG must 

provide oversight. Funds through the 

Recovery Act are available through FY 2013 

and beyond for the specified energy properties 

program. The OIG will continue this work at 

Departmental Offices to determine whether the 

funds were spent as intended. While not an 

ideal situation, the Treasury OIG is providing 

the only monitoring presence in the field by 

Treasury for this program. The OIG will also 

continue its oversight of the low-income 

housing program as funded projects are being 

brought on line. In addition, the OIG 

anticipates an increase of related criminal 

investigations as Treasury continues to 

disburse these funds.

Programs to Combat Money Laundering and 

Terrorist Financing and to Enforce the Bank 

Secrecy Act - Treasury faces unique 

challenges in carrying out its responsibilities 

under the Bank Secrecy Act (BSA) and the 

USA Patriot Act to prevent and detect money 

laundering and terrorist financing. While the 

Financial Crimes Enforcement Network 

(FinCEN) is the Treasury bureau responsible 

for administering BSA, it relies on other 

Treasury and non-Treasury agencies to enforce 

compliance with the Act’s requirements. 

Similarly, the Office of Foreign Assets Control 

(OFAC), the Treasury office responsible for 

administering U.S. foreign sanction programs, 

also relies on other Treasury and non-Treasury 

agencies to ensure compliance with OFAC

requirements. With continued distress in 

many financial institutions both domestically 

and globally, there is an increased risk that 

compliance with BSA and OFAC 

requirements may have deteriorated. These 

programs will continue to be a major focus of 

the OIG’s audit program.

Treasury’s Management of Capital 

Investments - Treasury must ensure that the 

hundreds of millions of dollars being expended 

on large acquisitions of systems and other 

capital investments are properly managed. The 

OIG will continue to work to improve the 

Department’s management of capital 

investments. The Department’s record in this 

regard has been mixed, at best. The OIG will 

continue its oversight of FinCEN’s BSA 

Information Technology Modernization 

program; the Treasury Network (TNet), and 

investments in systems for the Office of 

Financial Research in support of the FSOC.

OIG investigative priorities for FY 2013 

include: Investigating complaints of alleged 

criminal and serious misconduct by 

Department employees and contract 

employees; Investigating allegations of fraud 

and other crimes involving Treasury contracts, 

procurements, grants, guarantees (fictitious 

instruments), and federal funds; and 

conducting proactive efforts in detecting, 

investigating, and deterring electronic crimes 
and other threats to the Department’s physical 

and cyber critical infrastructure.

In addition to audit and investigative 

responsibilities cited above, the OIG will 

continue to provide audit and investigative 

oversight over two new Treasury programs—

the Small Business Lending Fund (SBLF) and 

State Small Business Credit Initiative 

(SSBCI). The SBLF is a $30 billion fund that 

is used by Treasury to inject capital into small 

and medium banks with incentives to 

encourage them to increase their lending. The 

SSBCI provides Treasury with $1.5 billion to 

support state programs designed to increase 

access to credit for small businesses. To ensure 

proper oversight of the SBLF, in 2010 OIG 

established the SBLF Program Oversight 

Office headed by a Special Deputy Inspector 

General with responsibility for all audit and 

investigative activities relating to the program 

and for recommending program 

improvements. Congress also directed the OIG 

to audit the use of SSBCI funds by 

participating states and required Treasury to 

recoup any misused funds identified by such 

audits. To comply with its mandates, the OIG 

will continue to assess Treasury’s 

implementation of the two programs, 

continually monitor recipient compliance with 

program requirements and use of funds, and 

evaluate the impact of these programs on small 

business lending.

Total resources required to support OIG 

operations in FY 2013 are $43,993,000, 

consisting of (1) $28,593,000 from direct 

appropriations and (2) $15,400,000 from 

reimbursable funding agreements to support 

the financial statement audit requirements of 

the Department and for OIG oversight of the 

SBLF and SSBCI programs.

OIG FY 2013 Budget Highlights

Dollars in thousands

Office of Inspector General FTE Amount

FY 2012 Enacted 172 $29,641

Changes to Base:

Maintaining Current Levels 

(MCLs):

- $225

Maintaining Current Levels - $225

Non-Recurring Costs: - ($784)

Decrease in Material Loss 

Review Workload

- ($784)

Subtotal FY 2013 Changes to 

Base

- ($559)

Total FY 2013 Base 172 $29,082

Program Changes:

Program Decreases: - ($549)

Workload Management - ($549)

Program Increases: - $60

Council of the Inspectors 

General on Integrity and 

Efficiency

- $60

Total FY 2013 Request 172 $28,593

FY 2013 Budget Adjustments

Maintaining Current Levels (MCLs) 

Maintaining Current Levels +$225,000 / +0

FTE

Funds are requested for inflation adjustments 

(1.7 percent) in non-labor expenses such as 

GSA rent adjustments, postage, supplies and 

equipment and health benefits and the increase 

in Federal Employees Retirement System 

participation. Funds are also requested for the 

proposed 2013 pay raise (0.5 percent).

Program Decreases

Decrease in Material Loss Review Workload -

$784,000 / +0 FTE

Decreased workload related to MLRs due 

economic improvement and decreasing bank 

failure rate.

Workload Management -$549,000 / +0 FTE

Decrease in mandatory and high-risk program 

and process oversight, attrition management 

and oversight of other estimated high return 

programs.
Program Increases

Council of the Inspectors General on Integrity 

and Efficiency +$60,000 / +0 FTE

Increase required for contribution to the 

Council of Inspectors General for Integrity and 

Efficiency.

Explanation of Budget Activities

Audit ($22,016,000 from direct 

appropriations, $15,400,000 from 

reimbursable resources)

The Office of Audit conducts audits, provides 

firsthand, unbiased perspectives and 

recommendations for improving the economy, 

efficiency, and effectiveness of Treasury 

programs and operations under its jurisdiction. 

The Office produces more than 60 products 

annually. The requested funding for FY 2013 

is necessary to perform mandated work and 

maintain an appropriate level of oversight of 

Treasury programs and operations consistent 

with its responsibilities under the Inspector 

General Act. The OIG also responds to 

requests by Treasury officials and the 

Congress for specific work. Reimbursable 

funding supports agreements for contract 

audits of other Treasury bureaus, as well as 

oversight of the Small Business Lending Fund 

(SBLF) and the State Small Business Credit 

Initiative (SSBCI) programs. SBLF/SSBCI 

program oversight and expected performance 

is detailed in the SBLF/SSBCI Program Office 

budget submission.

Investigations ($6,577,000 from direct 

appropriations)

The Office of Investigations prevents, detects 

and investigates complaints of fraud, waste 

and abuse. This includes the detection and 

prevention or deterrence of employee 

misconduct and fraud, or related financial 

crimes within or directed against Treasury. 

The Office refers its cases to the Department 

of Justice, state or local prosecutors for 

criminal prosecution or civil litigation, or to 

agency officials for corrective administrative 

action. Additionally, investigative oversight 

also extends to that of performing quality 

assurance reviews of the Treasury’s police 

operations at BEP and the U.S. Mint.

With the increased risk of the Recovery Act 

grant programs for low-income housing and 

specific energy properties, the Office of 

Investigations faces greater challenges and 

anticipated increases in grant fraud and the 

need to identify strengths and weaknesses in 

Community Development Financial 

Institutions (CDFI) Fund. Compliance and 

oversight of dispersed grant funds to ensure 

that CDFI funds provided are being used in 

accordance with the grant award. 

The OIG is also actively investigating 

numerous allegations in conjunction with 

failed banks.

Legislative Proposals

The OIG has no legislative proposals.
OIG Performance by Budget Activity

Budget Activity Performance Measure FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual Actual Actual Target Target

Audit Number of Completed Audit 

Products 

68 68 126 70 70

Audit Percent of Statutory Audits 

Completed by the Required 

Date 

100.0 50.0 100.0 100.0 100.0

Investigations Percentage (%) of 

Investigations that were 

referred for Criminal, Civil or 

Treasury administrative 

action

N/A N/A 85.0 80.0 80.0

Key: DISC - Discontinued and B - Baseline

Description of Performance

In FY 2011, the Office of Audit met its 

mandated audit requirements, completing 126

audit products, and all statutory audits by the 

due dates. The OIG employs a risk-based 

planning process to determine its annual 

workload based on identifying all mandatory 

audits and the resources required to complete 

the audits on time. OIG then reviews all 

remaining potential Treasury audits with an 

eye toward critical and high-risk programs, 

and determines which audits should be 

scheduled to best utilize the remaining 

resources. The Office plans to complete 70 

audit products and to complete 100 percent of 

statutory audits on time in FYs 2012 and 2013

by maintaining a trained and qualified 

professional audit staff.

In FY 2011, the OIG exceeded the target of 80

percent for the new investigative performance 

measure, Percentage (%) of Investigations that 

were referred for Criminal, Civil or Treasury 

Administrative Action. After senior leadership 

review, the OIG determined that the two 

previous performance measures did not 

accurately reflect investigative performance, 

and replaced them with this single measure.

OIG also opened 84 new investigations, closed 

68 investigations, and referred 100 percent of 

investigations that substantiated administrative 

violations against a Treasury employee to the 

appropriate bureau for action. In addition, the 

OIG referred 83 investigations for criminal 

prosecution, with 58 percent of those accepted 

for prosecution. The OIG received 

investigative referrals regarding potential 

criminal misconduct that occurred prior to or 

during bank failures, and has worked criminal 

investigations with the FDIC Office of 

Inspector General (FDIC OIG) and the OIG 

Office of Audit regarding potential 

prosecution of acts which may have 

contributed to the bank failures. In 

determining investigative workload, the OIG 

reviews each complaint or referral received to 

determine the appropriate approach to 

resolution – refer to the relevant office or 

bureau for administrative action; conduct an 

investigation that might result in criminal or 

civil convictions and penalties, or recommend 

no further action. At the planned staffing level 

with experienced criminal investigators and a 

consistent approach to all cases, the OIG 

expects to meet or exceed the performance 

target in FYs 2012 and 2013.