Office of Inspector General 

Program Summary by Budget Activity 

(Dollars in thousands) 

Appropriation FY 2009 FY 2010 FY 2011 

Enacted Enacted Request $ Change % Change

 Audit $20,116 $22,869 $23,306 $437 1.9%

 Investigations $6,009 $6,831 $6,963 $132 1.9% 

Subtotal, Office of Inspector General $26,125 $29,700 $30,269 $569 1.9% 

Offsetting Collections - Reimbursables $7,381 $8,000 $10,000 $2000 25.0% 

Total Program Operating Level $33,506 $37,700 $40,269 $2,569 6.8% 

Explanation of Request 

The Fiscal Year (FY) 2011 President’s Budget 

request for the Office of Inspector General 

(OIG) will be used to provide critical audit and 

investigative services, ensuring the effectiveness and integrity of Treasury’s programs 

and operations. The OIG will continue to 

address mandated requirements related to (1) 

audits of the Department’s financial 

statements, (2) information security, and (3) 

failed institutions regulated by the Office of 

the Comptroller of the Currency or the Office 

of Thrift Supervision resulting in material 

losses to the deposit insurance fund (material 

loss is defined as the greater of $25 million or 

2 percent of the institution’s assets). To the 

extent that resources are available, the OIG 

will conduct audits of the Department’s 

highest risk programs and operations. Five of 

those programs and operations are discussed 

below. This list is not all inclusive, and risks 

change over time and circumstance. 

Programs to Ensure the Safety and Soundness 

of the Nation’s Financial Markets – The wave 

of bank failures that started in 2008 underscore 

the need for increased audit coverage of a 

more prospective nature. The material loss 

reviews are a backward look at the quality of 

supervision as it relates to the failed institution 

under review. The OIG believes that it is just 

as important for regulators to address 

emerging risks in financial markets and 

products. The subprime mortgage crises was a 

costly lesson that serves to remind us that 

regulators need to anticipate, recognize, and 

control business practices that create 

unreasonable risk. 

Another area that the OIG believes requires 

vigorous oversight is Treasury’s responsibilities under the Housing and Economic 

Recovery Act of 2008. Treasury has taken on 

an important role to complement the Federal 

Housing Finance Agency’s September 2008 

decision to place Fannie Mae and Freddie Mac 

in conservatorship. 

Programs to Promote Economic Recovery -

With the enactment of the American Recovery 

and Reinvestment Act of 2009 (Recovery 

Act), Treasury was provided with, among 

other things, over $4 billion for low-income 

housing projects and specified energy 

properties of which the OIG has jurisdiction or 

joint jurisdiction with the Treasury Inspector 

General for Tax Administration. Additionally, 

the Community Development Financial 

Institutions Fund received a $100 million 

supplement to its fiscal year 2009 funding 

round for qualified program applicants through 

FY 2011. This FY 2009 funding nearly 

doubles the amount made available to the 

Fund through FY 2011. 

Programs to Combat Terrorist Financing and 

Money Laundering – Treasury faces unique 

challenges in carrying out its responsibilities 

under the Bank Secrecy Act (BSA) and USA 

Patriot Act to prevent and detect money 

laundering and terrorist financing. Past audits 

Department of the Treasury - Budget in Brief FY 2011 Page 25
and Congressional hearings have surfaced 

serious regulatory gaps in the detection of 

and/or timely enforcement action against 

financial institutions for BSA and related 

violations. Furthermore, with the current 

distress facing so many financial institutions 

throughout our country, we believe that there 

is an increased risk that compliance with BSA 

may have deteriorated further and may 

continue to worsen. 

Efforts to Ensure the Security of Treasury’s 

Information Systems -- The Department faces 

serious challenges in bringing its systems into 

compliance with information technology 

security policies, procedures, standards, and 

guidelines. In its FY 2008 Federal Information 

Security Management Act independent audit, 

the OIG continued to report deficiencies in the 

Department’s information security programs 

and practices. 

Treasury’s Management of Capital 

Investments -- Treasury needs to ensure that 

large acquisitions of systems and other capital 

investments are properly managed. The 

Department’s record in this regard has been 

mixed at best. While the OIG has reported that 

Treasury was able to complete a high priority 

national security system upgrade, the upgrade 

was delayed. Treasury also failed to 

implement other major system develop efforts 

successfully, such as BSA Direct and IRS’s 

web-based Electronic Fraud Detection System. 

The requested funding will also allow OIG to 

continue to prevent fraud, waste and abuse, at 

all Treasury non-IRS bureaus and offices, 

including investigating complaints of alleged 

employee misconduct, and allegations of fraud 

and other crimes involving Treasury programs, 

performing oversight of the Treasury's police 

operations at the Bureau of Engraving and 

Printing and the U.S. Mint, continue reviewing 

and investigating instances where the U.S. 

Mint’s Coin Redemption and Bureau of 

Engraving and Printing’s Currency Redemption Programs are used to facilitate money 

laundering, structuring, and other unlawful 

activities, and conducting proactive efforts to 

detect, investigate, and deter electronic crimes 

and other threats to the Department’s physical 

and cyber critical infrastructure. 

Resources required to support OIG operations 

for FY 2011 are $30,269,000 from direct 

appropriations, and $10,000,000 from 

offsetting collections and reimbursable 

agreements for contract financial statement 

audits of other Treasury bureaus. 

Purpose of Program 

The Treasury OIG plays a major role in 

support of the Department of the Treasury’s 

goal to ensure accountability and transparency, 

to protect the integrity of the Department, and 

to improve overall efficiency and effectiveness 

in Treasury programs and operations. OIG 

conducts audits and investigations of eight 

Treasury bureaus and all non-IRS Treasury 

offices in accordance with the Inspector 

General Act, as amended, to (a) promote 

economy, efficiency, and effectiveness in the 

administration of Treasury programs and 

operations, (b) prevent and detect fraud, waste, 

and abuse in Treasury programs and 

operations; and (c) keep the Secretary and the 

Congress fully and currently informed about 

problems, abuses, and deficiencies in Treasury 

programs and operations. 

There is also appropriated to the Department 

of the Treasury funds specifically identified 

for the annual audit of the Treasury-wide 

Financial Statements. This audit is performed 

by an independent public accounting firm 

under the supervision of OIG. These funds are 

not available for OIG programs and 

operations. 

Department of the Treasury - Budget in Brief FY 2011 Page 26
Appropriation Amount 

FY 2010 Enacted 29,700 

Changes to Base: 

Maintaining Current Levels (MCLs): $512 

FERS % Change 47 

Non-Pay Inflation Adjustment 56 

Pay Annualization 115 

Pay Inflation Adjustment 294 

Efficiencies Savings: ($5) 

Procurement Savings (5) 

Subtotal FY 2011 Changes to Base $507 

Total FY 2011 Base 30,207

Program Changes: 

Program Increases: $62 

CIGIE Fees 62 

p

E

S

A

a

p

T

Subtotal FY 2011 Program Changes $62 T

Total FY 2011 Budget Request 30,269 o

a

p FY 2011 Budget Adjustments 

OIG FY 2011 Budget Highlights

(Dollars in thousands) 

FY 2010 Enacted 

The FY 2010 enacted direct appropriation for 

OIG is $29,700,000. 

Maintaining Current Levels (MCLs) 

Adjustments Necessary to Maintain Current 

Levels +$512,000 / +0 FTE 

Funds are requested for: FERS % Change of 

+$47,000; non-labor related items such as 

contracts, travel, supplies, equipment and GSA 

rent adjustments of +$56,000; FY 2011 cost 

of the January 2010 pay increase of 

+$115,000; and proposed January 2011 pay 

raise of +$294,000. 

Efficiencies Savings 

Procurement Savings -$5,000 / +0 FTE 3.5% 

Procurement Savings to be achieved through 

improved efficiencies and economies in the 

procurement process. 

Program Increases 

CIGIE Fees +$62,000 / +0 FTE 

Funds are requested for Treasury OIG's share 

of Council of Inspectors General for Integrity 

and Efficiency (CIGIE) cost of CIGIE 

operations. This funding will specifically 

support coordinated government-wide 

activities that identify and review areas of 

weakness and vulnerability in federal 

rograms and operations with respect to fraud, 

waste, and abuse. 

xplanation of Budget Activities 

alaries and Expenses 

udit ($23,306,000 from direct appropriations 

nd $10,000,000 from reimbursable 

rograms) 

he Office of Audit conducts audits of eight 

reasury bureaus and all non-IRS Treasury 

ffices; produces more than 60 products 

nnually; and provides firsthand, unbiased 

erspectives and recommendations for 

improving the economy, efficiency, and 

effectiveness of Treasury programs and 

operations. The Office of Audit has recently 

been challenged to keep up with an increasing 

number of bank failures that require dedicated 

resources to conduct mandated material loss 

reviews. The requested funding will better 

enable OIG to meet those requirements. The 

requested funding will also be used by OIG to 

provide initial oversight of more than $4 

billion for low-income housing projects and 

specified energy properties grants authorized 

by the American Recovery and Reinvestment 

Act (Recovery Act). The Office also responds 

to requests by Treasury officials and the 

Congress for specific work. Reimbursable 

funding supports agreements for contract 

audits of other Treasury-wide financial 

statements. 

Investigations ($6,963,000 from direct 

appropriations) 

The Office of Investigations prevents, detects 

and investigates complaints of fraud, waste 

and abuse at eight Treasury bureaus and all 

non-IRS Treasury offices. This includes the 

detection and prevention or deterrence of 

employee misconduct and fraud, or related 

financial crimes within or directed against 

Treasury. The Office of Investigations refers 

Department of the Treasury - Budget in Brief FY 2011 Page 27
its cases to the Department of Justice and state Legislative Proposals 

or local prosecutors for criminal prosecution or 

civil litigation, or to agency officials for Treasury OIG has no legislative proposals for corrective administrative action. FY 2011. 

OIG Performance by Budget Activity 

Budget Activity Performance Measure 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 

Actual Actual Target Actual Target 

Met? Target Target 

Audit Number of completed audit products 

(Ot) 

64 64 60 68 Y 62 62 

Investigations Percentage (%) of all cases that were 

accepted by prosecutors, referred for 

agency action, or closed during the 

fiscal year and were completed within 

18 months of case initiation (E) 

NA NA B 92 Y 70 70 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and B=baseline 

Description of Performance 

In FY 2008, the Office of Audit performed or 

supervised contractors to meet its financial 

statement and information security mandated 

audit requirements. It also performed 

mandated material loss reviews of failed 

financial institutions supervised by Treasury. 

Furthermore, the Office of Audit directed its 

self-initiated work toward addressing 

Treasury’s major management and performance challenges. The Office of Audit 

completed 64 audit products, and met all 

statutory completion requirements. 

In FY 2008, the Office of Investigations 

continued investigating all reports of fraud, 

waste and abuse and other criminal activity. 

The Office of Investigations referred 93 

investigations for criminal prosecution, civil 

litigation, or corrective administrative action. 

The Office of Investigations undertook a 

thorough review of their performance measure 

methodology, and has developed better and 

more realistic measures with which to gauge 

their investigative performance. These new 

measures went into effect in FY 2009, and will 

be evaluated through the year. 

In FY 2009, the OIG maintained performance 

at a level consistent with FY 2008, and 

continued to direct a significant portion of its 

limited resources to conducting the increasing 

number of material loss reviews of failed 

banks. Furthermore, the OIG began providing 

oversight of more than $4 billion for lowincome housing projects and specified energy 

properties grants authorized by the American 

Recovery and Reinvestment Act (Recovery 

Act). The OIG also closed 94 investigative 

cases. 

FY 2010 resources will enhance OIG’s ability 

to conduct material loss reviews required as a 

result of the increasing number of bank 

failures and OIG will continue to direct its 

remaining resources to auditing Treasury 

programs: to ensure the safety and soundness 

of the nation’s financial markets; to promote 

economic recovery; to combat terrorist 

financing and money laundering; to ensure the 

security of treasury’s information systems, 

and; to improve Treasury’s management of 

capital investments. 

As in FY 2010, the FY 2011 requested 

resources will maintain the OIG’s ability to 

conduct material loss reviews of failed banks 

and critical and high risk Treasury programs 

and processes. 

Department of the Treasury - Budget in Brief FY 2011 Page 28