COMMODITY FUTURES TRADING COMMISSION

SEMIANNUAL REPORT 

OF THE 

OFFICE OF THE 

INSPECTOR GENERAL

FOR THE PERIOD ENDING MARCH 31, 2014
U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5110

Facsimile: (202) 418-5522

www.cftc.gov

April 30, 2014 Office of the 

Inspector General

TO: The Commission 

FROM: A. Roy Lavik

Inspector General 

SUBJECT: Semiannual Report of the Office of the Inspector General

Attached is the Office of the Inspector General’s Semiannual Report for the period from 

October 1, 2013, through March 31, 2014. This report is submitted to you in accordance with 

the requirements of Section 5 of the Inspector General Act of 1978, as amended (IG Act), 5 

U.S.C. App. 3 § 5 and 8G. 

Under section 5(b) of the IG Act, the SAR shall be transmitted to the appropriate 

committees or subcommittees of Congress within thirty days after receipt of the Semiannual 

report, together with a report by the head of the establishment conforming to the requirements of 

section 5(b) of the Act. 

I appreciate your continuing support of this office. 

Recipients: 

Mark P. Wetjen, Acting Chairman

Scott D. O’Malia, Commissioner

Attachment: 

Semiannual Report for the CFTC OIG
i

OFFICE OF THE INSPECTOR GENERAL

COMMODITY FUTURES TRADING COMMISSION

SEMIANNUAL REPORT

FOR THE PERIOD FROM

October 1, 2013 THROUGH March 31, 2014

TABLE OF CONTENTS

TABLE OF CONTENTS................................................................................................................. i

INDEX OF IG ACT REPORTING REQUIREMENTS ...............................................................iii

EXECUTIVE SUMMARY ............................................................................................................ 1

MANAGEMENT AND ADMINISTRATION .............................................................................. 4

1. CFTC Programs and Operations.......................................................................................... 4

2. OIG Responsibilities............................................................................................................ 4

3. OIG Resources..................................................................................................................... 6

COMPLETED AUDITS, INSPECTIONS, EVALUATIONS, REVIEWS and OTHER 

PROJECTS ..................................................................................................................................... 6

1. Audit of CFTC Customer Protection Fund for Fiscal Year 2013........................................ 6

2. Audit of CFTC Financial Statements for Fiscal Year 2013 ................................................ 7

3. Management Letter - CFTC Financial Statements for Fiscal Year 2013 ............................ 7

4. Limited Review of Compliance with the Federal Managers' Financial Integrity Act 

(FMFIA), Section 2 and Section 4....................................................................................... 8

5. Audit of CFTC’s FY2013 Implementation of the Federal Information Security 

Management Act of 2002 .................................................................................................... 8

6. Inspector General’s Assessment of CFTC’s Management Challenges............................... 9

7. Review of the Commodity Futures Trading Commission’s Response to Allegations 

Pertaining to the Office of the Chief Economist ............................................................... 10

CURRENT AUDITS, INSPECTIONS, EVALUATIONS, REVIEWS, and OTHER PROJECTS

....................................................................................................................................................... 13

1. Audit of CFTC Financial Statements for Fiscal Year 2014 .............................................. 13

2. Audit of CFTC’s Resource Allocation on Information Technology for Achieving its 

Strategic Regulatory Goals of Ensuring Sound Markets, Mitigating Systemic Risk, and 

Monitoring Intermediaries................................................................................................. 13

3. Audit of CFTC’s Procedures for Evaluating Futures Commission Merchants’ (FCM) and 

Retail Foreign Exchange Dealers’ (RFED) Compliance with Mandated Financial 

Regulatory Reporting Requirements................................................................................. 14
ii

4. Audit of the CFTC Consumer Outreach Program’s Efforts for Enhancing Awareness of 

Regulatory Resources and Protections Available to Commodity Market Users Against 

Fraud.................................................................................................................................. 14

5. Limited Review of CFTC’s Compliance with the Improper Payments Elimination and 

Recovery Act (IPERA)...................................................................................................... 15

6. Review of CFTC’s Use of Leased Space in Kansas City.................................................. 15

AUDIT REPORTS and REVIEWS OVER SIX MONTHS OLD................................................ 16

1. Corrective Action not Completed...................................................................................... 16

2. Corrective Action Completed............................................................................................ 16

3. Management Decision not Made....................................................................................... 16

INVESTIGATIONS ..................................................................................................................... 16

SUMMARY OF MATTERS REFERRED TO PROSECUTORIAL AUTHORITIES ............... 16

CONGRESSIONAL INQUIRIES ................................................................................................ 17

LEGISLATIVE, REGULATORY AND RULE REVIEWS........................................................ 17

PEER REVIEWS.......................................................................................................................... 18

SUMMARY OF EACH REPORT MADE TO THE AGENCY HEAD...................................... 19

REVISED MANAGEMENT DECISIONS.................................................................................. 19

INSPECTOR GENERAL DISAGREEMENT............................................................................. 19

GAO LIASON .............................................................................................................................. 19

STRATEGIC PLAN FOR THE OFFICE OF THE INSPECTOR GENERAL ........................... 20

1. Investigative Agenda ......................................................................................................... 20

2. Legislative and Regulatory Review Agenda ..................................................................... 20

3. Audit, Inspection, Evaluation and Review Agenda........................................................... 21

CONTACTING THE OFFICE OF THE INSPECTOR GENERAL............................................ 23

TABLE 1 – REPORTS ISSUED WITH QUESTIONED COSTS............................................... 24

TABLE 2 – REPORTS ISSUED WITH RECOMMENDATIONS THAT FUNDS BE PUT TO 

BETTER USE............................................................................................................................... 25
iii

INDEX OF IG ACT REPORTING REQUIREMENTS

Section 4(a)(2) Review of legislation and regulations.............................................17

Section 5(a)(1) Significant problems, abuses and deficiencies....................................1

.

Section 5(a)(2) Recommendations with respect to significant problems............................1

Section 5(a)(3) Significant recommendations that have not been completed...............16

Section 5(a)(4) Matters referred to prosecutorial authorities.............................. ...16

Section 5(a)(5) Summary of instances where information was refused......................19

Section 5(a)(6) Completed audit reports...........................................................6

Section 5(a)(7) Significant audit reports.............................................................1

Section 5(a)(8) Statistical Table—Questioned Costs..........................................24

Section 5(a)(9) Statistical Table—Funds Recommended for Better Use....................25

Section 5(a)(10) Audit reports lacking management decision.................................16

Section 5(a)(11) Significant revised management decisions...................................19

Section 5(a)(12) Significant management decisions where the IG disagrees................19

Section 5(a)(13) Information described under the Federal Financial Management...........7

Improvement Act of 1996

Section 6(b)(2) Summary of reports to Chairman where assistance was refused..........19
1

OFFICE OF THE INSPECTOR GENERAL

COMMODITY FUTURES TRADING COMMISSION

SEMIANNUAL REPORT

FOR THE PERIOD FROM

October 1, 2013 THROUGH March 31, 2014

EXECUTIVE SUMMARY

This semiannual report is issued by the Commodity Futures Trading Commission’s 

(CFTC’s) Office of Inspector General (OIG) pursuant to the Inspector General Act of 1978, as 

amended.1 It summarizes OIG’s activities and accomplishments for the period October 1, 2013

through March 31, 2014. During this period, OIG completed 3 audits, one management letter, 

two reviews, one evaluation, and issued a required discussion of management challenges. OIG 

began one audit and one limited review during the reporting period. OIG continued work on 

three audits and one review, all begun during the prior reporting period. A peer review of the 

OIG audit function was begun during the reporting period. No changes in OIG personnel took 

place during the reporting period. 

OIG reviewed selected proposed Division of Enforcement actions, as well as selected

rules proposed by CFTC and by regulated entities, and other Agency actions. In addition, OIG 

participated in training, visited CFTC field offices, and participated in Government-wide OIG 

professional and cooperative meetings and activities. No investigations were begun during the 

reporting period. No significant problems, abuses or deficiencies regarding CFTC programs and 

operations were identified during the reporting period. 

Highlights of OIG’s completed and ongoing audits, evaluations, peer review activities, 

and other projects include:

• In accordance with the Accountability of Tax Dollars Act of 20022, OIG contracted for and 

completed the required fiscal year (FY) 2013 audit of the CFTC financial statements. For the 

ninth consecutive year, the audit concluded that the CFTC financial statements were 

presented fairly, in all material respects, and were in conformity with the U.S. generally 

accepted accounting principles.

• In accordance with the Dodd-Frank Act,

3 OIG contracted for and completed the required FY

2013 audit of the CFTC Customer Protection Fund. The Customer Protection Fund financial 

statements as of September 30, 2012, were presented fairly, in all material respects, in 

conformity with U.S. generally accepted accounting principles. 

 1 P.L. 95-452, 92 Stat. 1101 (1987). 2 P.L. 107-298, 116 Stat. 2049 (2002). 3 Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-208, 124 Stat. 1376 (2010). 
2

• OIG contracted for and completed an audit of CFTC’s FY 2013 implementation of the 

Federal Information Security Management Act of 2002 (FISMA), performed in accordance 

with generally accepted government auditing standards. The audit was performed in 

accordance with generally accepted government auditing standards, and the report was issued 

on February 20, 2014. The audit report concluded that the CFTC has made positive strides 

over the last year in addressing information security weaknesses and continues to make 

progress in becoming fully FISMA compliant; however, the CFTC still faces challenges to 

fully implement information security requirements as stipulated in various federal guidelines 

and mandates and included 14 recommendations. 

• OIG completed a limited review to determine whether the evaluation of the system of 

internal accounting and administrative control, as described in Office of Management and 

Budget Circular No. A-123, Management’s Responsibility for Internal Control, has been 

carried out in a reasonable and prudent manner at the Commodity Futures Trading 

Commission for FY 2013. Nothing came to our attention that would indicate that the CFTC 

is not complying with the above-mentioned circular. 

• In accordance with The Reports Consolidation Act of 2000, OIG completed a management 

letter that summarizes the Inspector General’s opinion of the most serious management and 

performance challenges facing the CFTC FY 2014 and assessed the agency’s progress in 

addressing management challenges identified for FY 2013. OIG concluded that progress had 

been made in addressing the challenges identified for FY 2013.

• OIG completed its Review of the Commodity Futures Trading Commission’s Response to 

Allegations Pertaining to the Office of the Chief Economist (OCE). CFTC received a 

complaint regarding the use of confidential trade information by OCE economists in 

December 2012; after an initial review lasting two days Agency management shut down the 

research program and prohibited all publication and presentation of OCE papers. OIG began 

its review in January 2014, and found insufficient evidence to prove any misuse or improper 

disclosure of confidential trade information by OCE economists, identified potential Agencywide internal control weaknesses pertaining to the use of confidential trade information, 

concluded that recent changes to the economic research program had damaged the program 

and raised legal issues due to the length of time the Agency was taking to both review 

proposed economic research papers and to reestablish comparable research capabilities that 

existed prior to the receipt of the complaint, and recommended restarting the research 

program and making the review process more efficient and shorter. 

• In accordance with the Accountability of Tax Dollars Act of 20024, OIG contracted for and 

began monitoring the required FY 2014 audit of the CFTC financial statements. 

• In compliance with the Improper Payments Elimination and Recovery Act of 2010 (IPERA), 

OIG began a limited review of improper payment reporting in the agency’s FY 2013 Annual 

Financial Report (AFR) to assess the agency’s compliance with IPERA. 

 4 See fn.2. 
3

• The Office of Inspector General for the Export-Import Bank began a peer review audit of the 

CFTC OIG audit function.

• OIG continued monitoring a contract audit that will assess the review process employed by 

CFTC examination staff in the Division of Swap Dealer and Intermediary Oversight to 

evaluate financial information received from Futures Commission Merchants and Retail 

Foreign Exchange Dealers in compliance with CFTC regulatory requirements including CEA 

section 1.16 and 1.17. The audit may also evaluate policies and procedures CFTC employs 

to ensure that registrants holding customer funds remain in compliance with CFTC 

requirements. 

• OIG continued monitoring a contract survey audit of CFTC’s resource allocation on 

information technology for achieving its strategic regulatory goals of ensuring sound 

markets, mitigating systemic risk, and monitoring intermediaries.

• OIG continued monitoring a contract audit of the CFTC Consumer Outreach Program’s 

efforts for enhancing awareness of regulatory resources and protections available to 

commodity market users against fraud. 

• OIG continued its review of the CFTC’s leased space at its Kansas City field office, to 

evaluate whether leased space is being used efficiently. We delivered a discussion draft to 

relevant Agency management on March 31, 2014. 
4

MANAGEMENT AND ADMINISTRATION

1. CFTC Programs and Operations

Congress created the Commodity Futures Trading Commission in 1974 as an 

independent agency with the mandate to regulate commodity futures and options markets in the 

United States. The Commission’s mandate was renewed and/or expanded in 1978, 1982, 1986, 

1992 and 1995. In December 2000, the Commission was reauthorized by Congress and the 

President through Fiscal Year 2005 with the passage of the Commodity Futures Modernization 

Act of 2000 (CFMA). In May of 2008, Congress reauthorized the CFTC through Fiscal Year 

2013. On July 21, 2010, the President signed into law the Dodd-Frank Act, which expanded 

CFTC’s jurisdiction and authorities. 

The CFTC is responsible for fostering the economic utility of futures markets by 

encouraging their competitiveness and efficiency, ensuring their integrity and protecting market 

participants against manipulation, abusive trade practices and fraud. Through effective oversight 

regulation, the CFTC enables the commodity futures markets better to serve their vital function 

in the nation’s economy–providing a mechanism for price discovery and a means of offsetting 

price risks. The recent Dodd-Frank Act authorized the CFTC to regulate swap dealers, increase 

transparency and improve pricing in the derivatives marketplace, and lower risk to the American 

public. 

The CFTC operating divisions are: Office of the Chairman, Division of Clearing and 

Risk, Division of Swap Dealer and Intermediary Oversight, Division of Enforcement, Division 

of Market Oversight, Office of the Chief Economist, Office of the Executive Director, Office of 

General Counsel, Office of International Affairs, and Office of Data and Technology. In 

addition to its headquarters office in Washington, DC, the CFTC maintains offices in Chicago, 

Illinois; Kansas City, Missouri; and New York, New York. 

2. OIG Responsibilities

The CFTC OIG was created in 1989 in accordance with the 1988 amendments to the 

Inspector General Act of 1978.1 OIG was established as an independent unit to:

• Promote economy, efficiency and effectiveness in the administration of CFTC programs 

and operations and detect and prevent fraud, waste and abuse in such programs and 

operations;

• Conduct and supervise audits and, where necessary, investigations relating to the 

administration of CFTC programs and operations; 

 1 Inspector General Act Amendments of 1988, P.L. 100-504, 102 Stat. 2515 (1988). 
5

• Review existing and proposed legislation, regulations and exchange rules and make 

recommendations concerning their impact on the economy and efficiency of CFTC 

programs and operations or the prevention and detection of fraud and abuse; 

• Recommend policies for, and conduct, supervise, or coordinate other activities carried out 

or financed by such establishment for the purpose of promoting economy and efficiency 

in the administration of, or preventing and detecting fraud and abuse in, its programs and 

operations; and

• Keep the Commission and Congress fully informed about any problems or deficiencies in 

the administration of CFTC programs and operations and provide recommendations for 

correction of these problems or deficiencies.

OIG is required to conduct, supervise and coordinate audits of CFTC programs and 

operations in accordance with generally accepted government auditing standards.2 OIG is also 

required to recommend changes to existing and proposed CFTC programs and operations to 

promote economy, efficiency and effectiveness and to prevent and detect fraud and abuse. 

The OIG also conducts inspections, evaluations, and reviews from time to time. As 

stated in the 2011 Quality Standards for Inspection and Evaluation issued by the Council of 

Inspectors General for Integrity and Efficiency (CIGIE): 

An inspection is defined as a process that evaluates, reviews, studies, and/or analyzes the 

programs and activities of a Department/Agency for the purposes of providing 

information to managers for decision making; making recommendations for 

improvements to programs, policies, or procedures; and identifying where administrative 

action may be necessary. Inspections may be used to provide factual and analytical 

information; monitor compliance; measure performance; assess the efficiency and 

effectiveness of programs and operations; share best practices; and inquire into 

allegations of fraud, waste, abuse, and mismanagement.3

OIG investigations are performed in accordance with the Quality Standards for 

Investigations issued by the President’s Council on Integrity and Efficiency and the Executive 

Council on Integrity and Efficiency and are performed in response to allegations and/or evidence 

indicating possible violations of law, regulations, or applicable standards, as well as other 

improper conduct in connection with the programs and operations of the Agency. 4 

OIG operates independently of the Agency and has not experienced any interference from 

the CFTC Chairman or Commissioners in connection with the conduct of any investigation, 

 2 The US Government Accountability Office issues the Government Auditing Standards (December 2011). The 

standards are available at http://gao.gov/assets/590/587281.pdf. 3 Quality Standards for Inspection and Evaluation, page i. http://www.ignet.gov/pande/standards/oeistds11.pdf. 4 The publication titled Quality Standards for Investigations (December 2003) was issued by the President’s 

Council on Integrity and Efficiency and the Executive Council on Integrity and Efficiency and subsequently adopted 

by the CIGIE. The standards are available at http://www.ignet.gov/pande/standards/invstds.pdf. 
6

inspection, evaluation, review, or audit, and our investigations have been pursued regardless of 

the rank or party affiliation of the target. OIG has conducted audits, inspections, evaluations, 

and reviews without interference where it has perceived the opportunity to recommend 

improvement to futures regulation efforts, again without regard to the party affiliation of any 

Chairman or Commissioner.

5

 

3. OIG Resources

The CFTC OIG consists of the Inspector General, an acting Assistant Inspector General 

for Audit, a Senior Auditor, two Attorney-Advisors, and a secretary. The Inspector General has 

been with the CFTC since 1990. 

COMPLETED AUDITS, INSPECTIONS, EVALUATIONS, 

REVIEWS and OTHER PROJECTS

1. Audit of CFTC Customer Protection Fund for Fiscal Year 2013

Audit Objectives

Section 745(g)(5)(I) of the Dodd-Frank Act requires the Agency to submit to Congress a 

yearly report on the Commission’s whistleblower award program that includes a complete set of 

audited financial statements, including a balance sheet, income statement, and cash flow 

analysis. The OIG undertook this required audit. 

The objective of this audit was to render an opinion on the CFTC’s Customer Protection 

Fund’s financial statements and report on the Customer Protection Fund’s internal controls and 

compliance with laws and regulations. 

Status

CFTC OIG contracted with an independent public accounting firm (IPA) to perform this 

audit. OIG monitored this required audit, and the IPA reported on October 30, 2013, that the 

Customer Protection Fund financial statements as of September 30, 2013, were presented fairly, 

in all material respects, in conformity with U.S. generally accepted accounting principles.6 

 5 The Inspector General Act of 1978, as amended, states: “Neither the head of the establishment nor the officer next 

in rank below such head shall prevent or prohibit the Inspector General from initiating, carrying out, or completing 

any audit or investigation....” 5 U.S.C. App. 3 sec. 3(a). 6 Available here: http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/cpfreport2012.pdf. 
7

2. Audit of CFTC Financial Statements for Fiscal Year 2013

Audit Objectives 

In FY 2002, Congress passed the Accountability of Tax Dollars Act (ATDA). The 

ATDA requires the CFTC, along with numerous other Federal entities, to have its financial 

statements audited annually. To this end, following a formal procurement, the Inspector General 

selected an IPA to provide the audit effort required to enable the contractor to render an opinion 

on the Agency’s financial statements for Fiscal Year 2013. 

The objective of this audit was to render an opinion on the CFTC’s financial statements 

and report on the Agency’s internal controls and compliance with laws and regulations. 

Status

For the ninth consecutive year, an independent public accounting firm reported that the 

CFTC financial statements were presented fairly in all material respects, and in conformity with 

the U.S. generally accepted accounting principles for Federal agencies. Furthermore, the CFTC 

financial management system is in substantial compliance with the Federal Financial 

Management Improvement Act of 1996 (although CFTC is not required to comply with FFMIA, 

it has elected to do so). The financial statement audit report was issued on December 17, 2013.7 

3. Management Letter - CFTC Financial Statements for Fiscal Year 2013

Audit Objectives 

Pursuant to the audit effort required to render an opinion on the Agency’s financial 

statements for FY 2013, the IPA procured on behalf of the Inspector General was required to 

identify any matters requiring the issuance of a management letter. 

The objective of the management letter is to report deficiencies identified during the audit 

that did not materially impact the financial statements but require corrective action. 

Status

The management letter containing five recommendations was issued on December 16, 

2013. 

 7 Available here: http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/2012finstatementaudit.pdf. 
8

4. Limited Review of Compliance with the Federal Managers' Financial Integrity Act

(FMFIA), Section 2 and Section 4

Review Objectives

The Office of the Inspector General has conducted a limited review to determine whether 

the evaluation of the system of internal accounting and administrative control, as described in 

Office of Management and Budget Circular No. A-123, Management’s Responsibility for 

Internal Control, has been carried out in a reasonable and prudent manner at the Commodity 

Futures Trading Commission for the year ended September 30, 2013. 

The Circular requires each agency to assess and report on the adequacy of internal controls

over its programs and operations (Federal Managers’ Financial Integrity Act of 19828 (FMFIA) 

Section 2), and to assess, document, and report on controls over financial management systems 

to ensure conformance with government-wide requirements (FMFIA Section 4).

Status

During this limited review, nothing came to our attention that would indicate that the 

CFTC is not complying with the above-mentioned circular.

5. Audit of CFTC’s FY2013 Implementation of the Federal Information Security 

Management Act of 2002

Objectives

The Federal Information Security Management Act of 2002 (FISMA)9 outlines the 

information security management requirements for agencies, and includes an annual independent 

evaluation of an agency’s information security program and practices to determine their 

effectiveness. FISMA requires the annual evaluation to be performed by the agency’s Office of 

the Inspector General (OIG). The objective of this audit was to perform an independent 

evaluation of the CFTC’s FY 2013 implementation of FISMA in accordance with generally 

accepted government auditing standards (GAGAS). As part of this audit, the OIG also assessed

the CFTC’s privacy program and privacy impact assessment processes as described in the 

Agency’s FISMA package. 

Status

CFTC OIG contracted with an IPA to conduct the audit in accordance with GAGAS. The 

required OIG template was completed and submitted to the Office of Management and Budget 

(OMB) on November 30, 2013 and the final evaluation report concluded that the CFTC has 

made positive strides over the last year in addressing information security weaknesses and 

continues to make progress in becoming fully FISMA compliant. However, the CFTC still faces 

 8 P.L. 97-255, 96 Stat. 814 (1982). 9 P.L. 107-347, 116 Stat. 2899 (2002).
9

challenges to fully implement information security requirements as stipulated in various federal 

guidelines and mandates. The report included 14 recommendations.

6. Inspector General’s Assessment of CFTC’s Management Challenges

Assessment Objectives

The Reports Consolidation Act of 2000 requires the Inspector General to summarize the 

most serious management and performance challenges facing the CFTC and to assess the 

Agency’s progress in addressing those challenges. This memorandum summarizes the results of 

the CFTC’s current financial statement audit, describes the Agency’s progress on last year’s 

management challenges, and finally discusses the most serious management challenges that we 

have identified. 

Status

Update: FY 2012 Management Challenges identified by the OIG. At the close of FY 2012, the 

OIG identified two most serious management challenges: Efficient Deployment of Information 

Technology Resources and Expanding Delivery of Customer Protection Resources and 

Consumer Education. During fiscal year 2013 the Agency addressed both issues, but these 

challenges remain. 

In FY2014, under a government-wide continuing resolution, CFTC allocated $4210

million towards technological tools-which is unchanged from FY 2013 and a decline of $9 

million from FY 2012 spending levels. However, during FY2013, CFTC’s regulatory 

responsibility over the $400 trillion swaps market11 increased with the availability of continuous 

data on swap transactions that must be analyzed and sifted for anomalous activity to initiate 

referrals to Division of Enforcement. Therefore, the efficient deployment of information 

technology resources remains a management challenge and concern given CFTC’s declining 

budget under sequestration. 

Our FY2013 financial statement audit of the CFTC Customer Protection Fund confirmed 

that the financial statements presented the fund’s financial position fairly, in all material respects, 

and that the fund was fully funded.12 As a result of this audit our near term goal is to evaluate 

how the Customer Protection fund is using its available resources to reach potential participants 

in the commodities markets with impartial and educational information. We have begun an audit 

to assess the success of this outreach. 

FY 2013 Most Serious Management Challenge. The most serious management challenge 

anticipated for FY 2014 is for the CFTC to deliver on congressional expectations in the 

 10 CFTC– President’s Budget and Performance Plan FY 2015, at page 8 (available at: 

http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/2013afr.pdf.). 11 Id., page 1. 12 The audit report is available here: 

http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/cpfreport2013.pdf. 
10

implementation of Dodd-Frank, including expansion of the CFTC’s regulatory footprint to the 

swaps market, while adhering to government wide budgetary constraints.

CFTC has promulgated over 67 rules, orders, and guidance responsive to the Dodd-Frank 

Act.13 Now that these rules are in place, management must develop additional mechanisms to 

shift agency productivity from rule writing to rule implementation. As we have identified in the 

past, technological spending can increase staff productivity, but the sheer volume and complexity 

of industry-supplied data mandates that knowledgeable agency staff be on hand to provide the 

guidance necessary to efficiently monitor the markets. With the availability of ownership 

control14 information across markets, CFTC surveillance of the swaps markets is broader and 

more complex than the agency’s pre-Dodd Frank Act mission of monitoring futures and options 

on futures markets. Therefore, the agency must adjust its regulatory strategy to reflect its 

expanded jurisdiction. 

Moreover, increased reportable data will increase stakeholders’ expectation that CFTC 

will conduct a robust oversight of the swaps market. On January 1, 2013, certain swap market 

participants began reporting new and historical swap data to Swap Data Repositories pursuant to 

17 CFR Part 45, and the Commission began the process of analyzing these new data and 

incorporating them into the weekly CFTC Swaps Report available on its website.15 As a 

consequence, the agency must now devote labor to the continuous surveillance of the swaps 

markets. In addition, the agency is expanding its oversight of Swap Execution Facilities (SEFs) -

- trading platforms that must be registered with the CFTC. Such structural changes will require 

the CFTC to expand compliance reviews of SEFs as they come online. This reinforces our 

assessment that the agency, in the near future, will have to examine its current labor skill set and 

reallocate resources – a challenge during sequestration – towards compliance matters as opposed 

to rule making.

7. Review of the Commodity Futures Trading Commission’s Response to Allegations 

Pertaining to the Office of the Chief Economist

The Commodity Futures Trading Commission has supported an economic research 

program almost continuously since its creation in 1976. The CFTC’s Office of Chief Economist 

has produced over 100 independent economic research papers on topics relating to the 

functioning of the futures markets. Each paper has been published as the work of the author, 

with CFTC employment or affiliation listed as a biographical detail and with a disclaimer stating 

that the research does not state the views of the Commission. CFTC economists are expected “to 

present and review papers at professional meetings and conferences and to contribute to the 

literature in the field,” and this expectation is stated in their position descriptions. Section 18 of 

 13 See remarks of Chairman Gensler at the CME Global Financial Leadership Conference, 

Nov. 19, 2013 (available here: http://www.cftc.gov/PressRoom/SpeechesTestimony/opagensler-153). 14 See Remarks of Chairman Gensler, Ownership and Control ("OCR") Reports, Forms 102/102S, 40/40S, and 71, 

October 30, 2013 (available at: http://www.cftc.gov/PressRoom/SpeechesTestimony/genslerstatement103013); see 

also 78 FR 69177-69266 (Nov. 18, 2013)(Final rules for ownership and control reports, effective date Feb. 18, 2014, 

available at: http://www.gpo.gov/fdsys/pkg/FR-2013-11-18/pdf/2013-26789.pdf). 15 See http://www.cftc.gov/MarketReports/SwapsReports/index.htm.
11

the Commodity Exchange Act16 requires CFTC to “establish and maintain” a “research and 

information program” that disseminates “educational and other informational materials” to 

market users and the public and, while CFTC’s economic research program is not specifically 

mandated, CFTC historically has described the economic research program as fulfilling the 

mandate of section 18. 

In December 2012, the CFTC received a complaint suggesting that confidential trade 

information protected under section 8(a)(1) of the Commodity Exchange Act, 12 U.S.C. 

§ 12(a)(1), had been misused by CFTC economists working in the Office of Chief Economist, 

and questioning the Agency’s authority to permit confidential trade information to be used for 

economic research. In January 2013, then Chairman Gensler asked OIG to review these issues, 

and asked us to examine controls on the use of confidential trade information, and onboarding 

documentation for economists in OCE. f

CFTC OIG determined that the use of confidential trade information for economic 

research purposes was authorized under section 18 of the Commodity Exchange Act. CFTC 

OIG did not find sufficient evidence to permit any conclusion that confidential trade information 

had been used or disclosed in violation of the Commodity Exchange Act. While witness 

statements uncovered no instances where information was misused; CFTC OIG ultimately 

concluded that the absence of controls on use and removal of confidential trade information 

rendered it impossible to determine conclusively that information was not misused. CFTC OIG 

found that the same lack of information security controls over the use of confidential trade 

information may be found Agency-wide. 

CFTC OIG determined that, while onboarding documentation for various economists 

serving at CFTC as employees, consultants, and contractors did contain errors, the errors were of 

an administrative nature and, looking to Comptroller General opinions addressing payment 

issues arising from onboarding errors, found in dicta uniform indication that work performed 

while an employee lacked proper onboarding due to administrative error can and usually should 

be ratified. Agency staff also told OIG that errors going to security clearances are not cause to 

disturb employee work product, unless there is extrinsic evidence that the work was not 

performed properly. The OIG noted that onboarding errors were considered only within OCE, 

with onboarding status for employees in other divisions not addressed by Agency management. 

CFTC OIG criticized a new review system for OCE economic research publications 

instituted by the Agency following the receipt of the December 2012 complaint. Management’s 

desire to detect instances where aggregated confidential trade data may be combined with 

publicly available data and reverse-engineered to permit the reader to ascertain the identity of a 

trader, or of the revelation of a trade secret is warranted; however, CFTC OIG found that the 

length of time the review process was taking was unacceptable. 

In October 2013 Agency management permitted publication of three of 24 pending 

economic research papers. CFTC OIG issued its discussion draft to the Commission on 

December 18, 2013. Dismayed by the length of time the review process was taking, especially 

for economic research papers that included no aggregated information protected under section 8, 

 16 7 USC 22(a).
12

we hoped to stimulate corrective action. Management provided their response on February 12, 

2014. 

Based on comments in the management response, as well as comments we received from 

OIG and CFTC staff, we made clarifying changes and corrections to the discussion draft that we 

thought were appropriate. While the management response expressed strong disagreement with 

our approach to the facts and legal issues,17 it nevertheless assured that the review process would 

speed up.18 Agency management permitted the publication of four additional papers shortly 

before the CFTC OIG issued its final report, and we noted these new approvals as a positive 

development. We referenced the management response (and included it as an attachment) in our 

final report order to clarify facts, and to apprise the Commission of the extent of our 

disagreement on the issues, but our conclusions and recommendations from the discussion draft 

remained unchanged. 

Shutting down all independent research and taking more than eight months to review 

economic research papers (including papers that contained no aggregated confidential trade data 

at all) raised potential legal issues, but more importantly raised significant issues going to the 

efficiency and effectiveness of the CFTC economic research program. 

Economic research may be instrumental in detecting and explaining systemic risk and 

other government-wide and market-wide issues of concern. Delaying the publication of research 

thwarts the goals of public education and notification of important economic research issues to 

Congress and to the public. As published research is the coin of the realm in academia, 

impediments to such research will likely decrease future useful expertise. The principle point is 

that an economic regulatory agency is potentially blocking itself off from the future input of 

highly qualified academics to assist the agency in its tasks. We care not how that time was 

divided internally; the Commission is the relevant unit. And it is the Commission that will bear 

the potential onus of obtaining any less input of relevant expertise going forward. 

Our report recommended restarting the economic research program with similar research 

capabilities as existed prior to the shut down, improving Agency-wide controls over the use and 

disclosure of confidential trade information, and shortening the time for any review process for 

economic research papers (while assuring the legality of any review process). 

We issued our report on February 21, 2014. Since then, agency management permitted 

publication of an additional five economic research papers at the close of the reporting period. 

 17 OIG issued a discussion draft to the Agency on December 18, 2013. Management provided their response on 

February 12, 2014. Based on comments in the management response, as well as comments we received from within 

OIG and from various CFTC staff, we made clarifying changes and corrections to the discussion draft that we 

thought were appropriate. We reference the management response (and include it as an attachment) in our final 

report order to clarify facts, and to apprise the Commission of the extent of our disagreement on the issues. Our 

conclusions and recommendations remained unchanged.

18 Management response at pages 13-14, and 37 n.177. 

http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/cftc_046841.pdf.
13

CURRENT AUDITS, INSPECTIONS, EVALUATIONS, 

REVIEWS, and OTHER PROJECTS

At the end of this reporting period, there were four ongoing audits, and one ongoing 

limited review, and one ongoing review. 

1. Audit of CFTC Financial Statements for Fiscal Year 2014

Audit Objectives

In 2002, Congress passed the Accountability of Tax Dollars Act.19 The Act requires the 

CFTC, along with numerous other Federal entities, to obtain an independent financial statement 

audit each year. The objective of this audit is to render an opinion on the CFTC’s Fiscal Year 

2014 financial statement and report on internal controls and compliance with laws and 

regulations. 

Status

 

During the reporting period, the Inspector General selected an IPA to render an opinion 

on the agency’s financial statements for Fiscal Year 2014 in accordance with generally accepted 

auditing standards, Government Auditing Standards, Office of Management and Budget (OMB) 

Bulletin 01-02 and OMB Circular A-136. The Fiscal Year 2014 audit began during this 

reporting period with an entrance conference with senior agency managers, the OIG and 

representatives from the IPA. Further meetings and reviews have taken place throughout this 

reporting period while work on the audit is ongoing. 

2. Audit of CFTC’s Resource Allocation on Information Technology for Achieving its 

Strategic Regulatory Goals of Ensuring Sound Markets, Mitigating Systemic Risk, 

and Monitoring Intermediaries

Audit Objectives

Since FY 2011, Congress has set aside specific funding levels to encourage the 

Commission to focus on technology as a key component of its surveillance and oversight 

program. CFTC OIG will audit CFTC’s resource allocation on information technology for 

achieving its strategic regulatory goals of ensuring sound markets, mitigating systemic risk, and 

monitoring intermediaries. 

 19 See fn. 2. 
14

Status

CFTC OIG contracted with an independent public accounting firm to conduct the audit. 

Fieldwork for this audit was ongoing at the close of the reporting period. The planned 

completion date is April 25, 2014. 

3. Audit of CFTC’s Procedures for Evaluating Futures Commission Merchants’ 

(FCM) and Retail Foreign Exchange Dealers’ (RFED) Compliance with Mandated 

Financial Regulatory Reporting Requirements

Audit Objectives

The objective of this audit is to assess the process CFTC examination staff, in the 

Division of Swap Dealers and Intermediary Oversight, undertake in their review of financial 

information submitted by FCM and RFED in compliance with CFTC regulatory requirements, 

including CEA section 1.16 and 1.17. The audit may also evaluate policies and procedures 

CFTC employs to ensure that registrants holding customer funds remain in compliance with 

CFTC requirements. 

Status

CFTC OIG contracted with an independent public accounting firm to conduct the audit. 

Fieldwork for this audit was ongoing at the close of the reporting period. The planned 

completion date is April 25, 2014.

4. Audit of the CFTC Consumer Outreach Program’s Efforts for Enhancing 

Awareness of Regulatory Resources and Protections Available to Commodity 

Market Users Against Fraud

Audit Objectives

The CFTC website states: “CFTC’s Office of Consumer Outreach continually strives to 

provide effective information and tools to help consumers avoid fraud.”

20 CFTC OIG is 

conducting an audit of the CFTC Consumer Outreach Program’s efforts for enhancing awareness 

of regulatory resources and protections available to commodity market users against fraud. 

Status

CFTC OIG contracted with an independent public accounting firm to conduct the audit. 

This audit was ongoing at the close of the reporting period. The planned completion date is 

April 25, 2014. 

 20 http://www.cftc.gov/ConsumerProtection/Resources/index.htm. 
15

5. Limited Review of CFTC’s Compliance with the Improper Payments Elimination 

and Recovery Act (IPERA)

Limited Review Objectives

IPERA directs each Agency’s Inspector General, beginning with Fiscal Year 2012, to 

review Agency improper payment reporting in the Agency’s Annual Financial Report (AFR) to 

assess the Agency’s compliance with IPERA.

Status

At the end of the reporting period, the limited review was in process. OIG issued a letter 

report on April 7, 2014 providing negative assurance that CFTC was in compliance with IPERA.

6. Review of CFTC’s Use of Leased Space in Kansas City

Background

CFTC OIG issued a review of small purchases in 2012.21 Our field work for this review

drew our attention to the fact that the Kansas City Office currently is not staffed at capacity; we 

viewed at least 30 empty workspaces (offices and cubicles) during our interviews there. The 

new offices in Kansas City at the time were less than a year old and we realized some staffing 

increases might be anticipated; however, since our report issued the Kansas City Board of Trade 

building has been sold, with all trading moved to Chicago. In our review of small purchases, and 

in our previous Semiannual Report,22 we noted the issue and advised that if space is not being 

used, we believe steps should be taken to reduce associated costs, perhaps through subleasing. 

Our review will analyze unused leased space in the Kansas City field office, and make 

recommendations as warranted.23 

Status

On March 31, 2014, we delivered our discussion draft to relevant Agency management 

for comment. 

 21 Our final report issued on December 21, 2012. Available here: 

http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/oig_finalreview122112.pdf. 22 CFTC OIG Semiannual Report for the Period Ending March 31, 2013, page 9. Available here: 

http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/oigsar033113.pdf. 23 We considered but determined not to address other CFTC leases at this time due to staffing limitations. 
16

AUDIT REPORTS and REVIEWS OVER SIX MONTHS OLD

1. Corrective Action not Completed

There were no instances of audit reports over six months old where corrective action had 

not been completed. 

2. Corrective Action Completed

There were no instances of reports issued before the commencement of the reporting 

period for which corrective action had been completed by the end of the reporting period. 

3. Management Decision not Made

There are no instances of a report issued before the commencement of the reporting 

period for which a management decision had not been made by the end of the reporting period. 

In 2006, the CFTC OIG issued a report titled “Review of the Need for a Western Regional Office 

in Los Angeles.” That report recommended, among other things, that the Commission review 

the feasibility of reestablishing the former Los Angeles field office. That recommendation was 

not carried out largely due to budget constraints. In January 2008, partially in response to a 

Congressional inquiry, CFTC OIG updated its analysis and on March 12, 2008, issued a followup report which reiterated the earlier recommendation. In January 2009, the Acting Chairman 

issued a decision declining to implement the recommendation generally due to cost 

considerations, but asked the Agency to revisit the issue on a yearly basis. We agree that this 

recommendation should be revisited, and implemented when feasible. We do not recommend 

closing any of the existing field offices. 

INVESTIGATIONS

The Inspector General Act of 1978, as amended, provides that the Inspector General may 

receive and investigate complaints or information from the Commission's employees and other 

sources concerning the possible existence of an activity constituting a violation of law, rules or 

regulations, or mismanagement, abuse of authority, or gross waste of funds, or a substantial and 

specific danger to the public health and safety. No investigations were pending at the close of 

the prior period. 

SUMMARY OF MATTERS REFERRED TO PROSECUTORIAL 

AUTHORITIES

No matters were referred to prosecutorial authorities during the reporting period. 
17

CONGRESSIONAL INQUIRIES

OIG fielded multiple requests for assistance from members of Congress and staff during 

the reporting period. Issues addressed included recent OIG activities, recent Agency activities, 

and proposed and pending legislation affecting the OIG and the Agency. 

LEGISLATIVE, REGULATORY AND RULE REVIEWS

1. Introduction and Summary

As specified in Section 4(a)(2) of the Inspector General Act of 1978, OIG reviews the 

impact of existing and proposed legislation and regulations on CFTC programs and operations 

and makes recommendations regarding more effective or efficient alternatives or protections 

against fraud and abuse. OIG also reviews exchange rule proposals circulated to senior staff at 

CFTC. 

OIG notified the responsible Divisions as to any concerns with draft and final documents 

relating to legislation, rules or investigations. Formal comments were not filed with the 

Commission during this reporting period.

2. Rule Reviews Initiated in Previous Reporting Periods

There were no rule reviews initiated in previous reporting periods which were continued 

into this reporting period.

3. Rule Reviews Initiated this Reporting Period

No rule reviews were initiated during this reporting period.

4. Legislative Activities

OIG tracked legislation impacting programs and operations of the CFTC, and made 

contact with Congressional staff concerning various Agency and IG issues as appropriate. The 

IG serves on the legislation committee for the Council of Inspectors General on Integrity and 

Efficiency, which comments on proposed amendments to the IG Act and other legislation 

affecting the IG community. 
18

PEER REVIEWS

An important function in each Agency OIG is the peer review process. The Inspector 

General community’s annual report, A Progress Report to the President, Fiscal Year 2007,

24

described the processes for audits and investigative peer reviews as follows:

Government Auditing Standards require that audit organizations conducting audits of 

Federal agencies undergo peer reviews every 3 years. The IG community has implemented a 

process to meet this requirement. The purpose of the peer review is to determine whether the 

reviewed audit organization’s internal quality control systems are adequate and provide

reasonable assurance that applicable auditing standards, policies and procedures are met.

Similarly, investigative peer reviews are conducted to ensure compliance with the 

requirements of the Quality Standards for Investigations and determine whether adequate 

internal safeguards and management procedures exist to ensure that law enforcement powers are 

properly exercised.25

Section 989C of the Dodd-Frank Act implemented a requirement to include in each OIG 

semiannual report an appendix containing 

• the results of any peer review conducted by another Office of Inspector General during 

the reporting period; or if no peer review was conducted within that reporting period, a 

statement identifying the date of the last peer review conducted by another Office of 

Inspector General;

• a list of any outstanding recommendations from any peer review conducted by another 

Office of Inspector General that have not been fully implemented, including a statement 

describing the status of the implementation and why implementation is not complete; and

• a list of any peer reviews conducted by the Inspector General of another Office of the 

Inspector General during the reporting period, including a list of any outstanding 

recommendations made from any previous peer review (including any peer review 

conducted before the reporting period) that remain outstanding or have not been fully 

implemented.

In accordance with Section 989C of the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (“Dodd-Frank Act”), Pub. L. 111-203, 124 Stat. 1376 (2010), please be advised 

that a peer review of CFTC OIG’s audit operations was in process at the end of the reporting 

period. A final report is expected by May 30, 2014. The last peer review of the audit function 

conducted by another Office of Inspector General was completed on March 31, 2011. 

 24 http://www.ignet.gov/randp/fy07apr.pdf. 25 Id. at p.19. 
19

The last peer review of the investigative function conducted by another Office of Inspector 

General was completed on March 27, 2013; it concluded that the system of internal safeguards 

and management procedures for the investigative function of the CFTC OIG in effect for the 

year ended January 31, 2013, was compliant with the quality standards adopted by CIGIE, and 

that CFTC OIG safeguards and procedures provide reasonable assurance of conforming with 

professional standards in the conduct of its investigations..

CFTC OIG did not conduct any peer reviews during this reporting period and there remain 

no outstanding recommendations from peer reviews previously conducted by CFTC OIG. 

During this reporting period, OIG continued to monitor the government-wide OIG peer review 

schedules as communicated by the Council of the Inspectors General on Integrity and Efficiency. 

There currently remain no outstanding recommendations from peer reviews previously 

conducted by or of CFTC OIG. 

SUMMARY OF EACH REPORT MADE TO THE AGENCY 

HEAD

No reports were made to the Agency head under section 6(b)(2) concerning information 

or assistance unreasonably refused or not provided (mandated under section 5(a)(5) of the Act).

REVISED MANAGEMENT DECISIONS

No management decisions were revised during the reporting period.

INSPECTOR GENERAL DISAGREEMENT

The Inspector General did not disagree with any management decisions on OIG 

recommendations during the reporting period.

GAO LIASON

OIG is charged with providing policy direction for, and conducting, supervising, and 

coordinating audits and investigations relating to CFTC programs and operations. In addition, 

OIG is required to recommend policies for, and conduct, supervise, and coordinate with other

Federal agencies, state and local governmental agencies, and nongovernmental entities, audits, 

investigations, and evaluations regarding the economy, efficiency, and effectiveness of CFTC 

programs and operations.
20

GAO also conducts audits of CFTC activities, and OIG plans its audits, inspections, 

evaluations, reviews, and investigations so as not to duplicate GAO's efforts. Moreover, OIG in 

its audit activities identifies the goals of each audit and the methods of reaching the goals so as to 

minimize the requirements placed on CFTC resources. 

STRATEGIC PLAN FOR THE OFFICE OF THE INSPECTOR 

GENERAL

1. Investigative Agenda

The Inspector General Act of 1978, as amended, provides that the Inspector General may 

receive and investigate complaints or information from the Commission's employees concerning 

the possible existence of an activity constituting a violation of law, rules or regulations, or 

mismanagement, gross waste of funds, abuse of authority or a substantial and specific danger to 

the public health and safety.

OIG has to date conducted only a reactive investigative program chiefly relying on 

unsolicited employee complaints as the source of investigative leads. However, allegations and 

complaints are also received from the general public and Congress. This reactive program has 

resulted in only a handful of investigations per year. This strategy was followed because OIG

believed that an independent regulatory Agency such as the CFTC, without grant money or 

substantial contracts to award, was not likely to generate a substantial investigative workload.

To insure that employee complaints could easily reach OIG, a 24-hour hotline was 

established in February 1993 to receive complaints. The hotline phone number is (202)418-

5510.

Because of the necessarily reactive nature of OIG's investigative program, no 

investigative agenda has been established.

2. Legislative and Regulatory Review Agenda

Because of the importance of this activity in a financial and economic regulatory Agency, 

OIG reviews proposed and final CFTC regulations, legislation and selected exchange rules using 

six basic criteria: Whether the Agency: (1) has identified specifically the problem(s) to be 

addressed by the proposal; (2) has defined through case study or data analysis a clear link 

between the proposed solution and the identified problem(s); (3) has specified clearly the means 

to effectively and efficiently enforce the proposal; (4) has assessed the likely efficiency and 

effectiveness of alternative solutions; (5) can reasonably document that the proposal will yield 

positive net benefits over the long term; and (6) has met the requirements of the Regulatory 

Flexibility Act and the Paperwork Reduction Act.

The Regulatory Flexibility Act requires the Agency to evaluate the impact of its 

regulations on small entities. The Paperwork Reduction Act requires the Agency to manage 
21

effectively and efficiently its information collections so that they are the least burdensome 

necessary to achieve the stipulated objectives.

Because OIG does not initiate legislation or, generally, regulations, OIG legislative and 

regulatory review program is reactive to the legislative and regulatory proposals developed by 

others. Accordingly, no independent legislative and regulatory review agenda has been 

established. 

3. Audit, Inspection, Evaluation and Review Agenda

a. Introduction

The primary objectives of the OIG audit, inspection, evaluation and review agenda is to 

promote long-term efficiency and effectiveness in the administration and operation of the 

Commission and to protect against fraud and abuse. The audit, review, evaluation, and 

inspection agenda and priorities for OIG are determined based on the following factors: 

• Adequacy of internal control systems as indicated by vulnerability assessments and 

internal control reviews recommended by OMB Circular A-123;

• Changes in the program conditions or particular vulnerability of the organization, 

program, activity, or function to problems or deficiencies;

• Current and potential dollar magnitude and likely benefits of a review on the 

efficiency or effectiveness of CFTC programs and operations;

• Management priorities and improvements that may be possible;

• Results of audits of CFTC programs and operations by other Federal agencies; and

• Availability of audit resources and the potential opportunity costs to the agency.

b. Annual Audits

The following required audits are performed on an annual basis.

Audit of CFTC Financial Statements

In FY 2002, Congress passed the Accountability of Tax Dollars Act. The Act requires 

the CFTC, along with numerous other Federal entities, to have its financial statements audited 

annually. To this end, OIG has engaged a contractor to provide the audit effort required to 

enable the contractor to render an opinion on the Agency’s financial statements for each fiscal 
22

year in accordance with generally accepted auditing standards, Government Auditing Standards 

and OMB Bulletin 07-04.

Audit of CFTC Customer Protection Fund

Section 745(g)(5)(I) of the Dodd-Frank Act requires the Agency to submit to Congress a 

yearly report on the Commission’s whistleblower award program that includes a complete set of 

audited financial statements, including a balance sheet, income statement, and cash flow 

analysis. The OIG is undertaking this required audit.

c. Annual Reviews and Evaluations

We will perform the following reviews and evaluations on an annual basis:

Inspector General’s Assessment of CFTC’s Management Challenges

The Reports Consolidation Act of 2000 requires the Inspector General to summarize the 

most serious management and performance challenges facing the CFTC and to assess the 

Agency’s progress in addressing those challenges.

Review of Compliance with the Federal Managers' Financial Integrity Act, FMFIA

In support of OMB Circular A-123 (Revised), the Inspector General will evaluate, 

provide technical assistance and advise the Agency head as to whether the Agency's review and 

evaluation process was conducted in accordance with the circular's requirements.

Evaluation of the CFTC Information Security Management Act, FISMA

The Federal Information Security Management Act requires the Inspector General or his 

designee to perform annual independent evaluations of the information security program and 

practices of the Agency. This compliance may also be performed through an audit. 

d. Other Audits, Inspections, Evaluations, Reviews and Projects

Looking to the long term, the OIG intends to focus the balance of its resources on the 

review of the management and operation of the agency and compliance with Congressional 

mandates. OIG plans to concentrate its efforts in reviewing activities relating to the most serious 

management challenges facing the CFTC. 

In addition, OIG is aware of the immense regulatory undertaking required under the 

Dodd-Frank Act. OIG will seek to identify issues and to conduct inspections, reviews, 

investigations and other activities relating to these management and regulatory challenges. 

Finally, OIG will stand ready to respond to issues and requests as they are received from 

Congress, the Agency and members of the public or any other source. 
23

e. Resources Required

OIG estimates that approximately two staff years of effort will be devoted over each of 

the next five years to the annual audit, the annual review, and the annual evaluation described 

above. However, OIG continuously updates its audit universe in view of CFTC’s increased 

responsibilities under the Dodd-Frank Act and will reevaluate its staffing needs once each update 

is complete. Revision of the CFTC OIG audit procedures and other remediation-related tasks, 

and all other investigations, inspections, evaluations, review and other projects will consume up 

to two and a half staff years. Because OIG resources can be diverted at any time to an 

investigation, audit, inspection, survey, evaluation, review, or other project that responds to 

current concerns or allegations, and must be completed in a timely fashion in order to be of 

assistance to the Agency or Congress, it is impossible to forecast with complete accuracy how 

resources will be utilized from year to year. In FY 2015, we anticipate hiring one additional full 

time staff. Due to staff size, we will continue to utilize outside independent auditors to perform 

OIG audits as necessary. 

CONTACTING THE OFFICE OF THE INSPECTOR 

GENERAL

OIG is located at 1155 21st Street, N.W., Washington, D.C. 20581. Regular business 

hours are between 8:30 AM and 5:00 PM, Monday through Friday, except Federal holidays. The 

telephone number is (202)418-5110. The facsimile number is (202)418-5522. The hotline 

number is (202)418-5510. The OIG web page is located at 

http://www.cftc.gov/About/OfficeoftheInspectorGeneral/index.htm. 
24

TABLE 1 – REPORTS ISSUED WITH QUESTIONED COSTS

(October 1, 2013 – March 31, 2014)

Dollar Value

Thousands

Number Questioned Unsupported

A. For which no management decision has 

been made by the commencement of the

reporting period 0 0 0

B. Which were issued during the reporting 

period 0 0 0

Subtotals (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
25

TABLE 2 – REPORTS ISSUED WITH RECOMMENDATIONS 

THAT FUNDS BE PUT TO BETTER USE

(October 1, 2012 – March 31, 2013)

Dollar Value

Number 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

Subtotals (A + B) 0 0

C. 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

( 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
THE INSPECTOR GENERAL

NEEDS YOUR HELP TO

ASSURE THE INTEGRITY OF 

CFTC’S PROGRAMS

Report FRAUD, WASTE

Or ABUSE to the 

INSPECTOR GENERAL

ANONYMOUSLY ANONYMOUSLY

HOTLINE

(202) 418-5510

Office of the Inspector General

Commodity Futures Trading Commission

1155 21ST Street, N.W.

Washington, D.C. 20581