Office of the Inspector General

Commodity Futures Trading Commission

Semiannual Report to Congress

April 1, 2015 – September 30, 2015
 

--PAGE INTENTIONALLY LEFT BLANK--
i

TABLE OF CONTENTS

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

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

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

MANAGEMENT AND ADMINISTRATION ............................................................................ 3

1. CFTC Programs and Operations..................................................................................... 3

2. OIG Responsibilities......................................................................................................... 3

3. OIG Resources................................................................................................................... 5

COMPLETED AUDITS, INSPECTIONS, EVALUATIONS, REVIEWS and OTHER 

PROJECTS .................................................................................................................................... 5

1. Performance Audit: Pension Prizers .............................................................................. 5

2. Performance Audit of the Division of Market Oversight’s Rule Enforcement 

Reviews (RER)................................................................................................................... 5

3. FY 2014 FISMA Follow-up Management Review ........................................................ 6

4. Review of Space Utilization of the New York Regional Office of the Commodity 

Futures Trading Commission.......................................................................................... 6

5. Two Management Letters ................................................................................................ 6

CURRENT AUDITS, INSPECTIONS, EVALUATIONS, REVIEWS, and OTHER 

PROJECTS .................................................................................................................................... 7

1. Financial Statement Audit: Agency Operations FY 2015............................................ 7

2. Financial Statement Audit: Customer Protection Fund FY 2015 .............................. 7

3. Financial Related Audit: Custodial Receivables........................................................... 7

4. Federal Information Security Management Act Audit................................................ 7

5. Review: CFTC’s Washington D.C. Building Lease ....................................................... 7

6. Whistleblower Office Review .......................................................................................... 7

7. Office of the Chief Economist Follow-up Review......................................................... 7

AUDIT REPORTS and REVIEWS OVER SIX MONTHS OLD.............................................. 8

1. Corrective Action not Completed ................................................................................... 8

2. Corrective Action Completed .......................................................................................... 8

3. Management Decision not Made.................................................................................... 8

INVESTIGATIONS ...................................................................................................................... 8

SUMMARY OF MATTERS REFERRED TO PROSECUTORIAL AUTHORITIES ............. 9

CONGRESSIONAL INQUIRIES................................................................................................ 9

LEGISLATIVE, REGULATORY, AND RULE REVIEWS ....................................................... 9

PEER REVIEWS......................................................................................................................... 10

SUMMARY OF EACH REPORT MADE TO THE AGENCY HEAD.................................... 11

REVISED MANAGEMENT DECISIONS................................................................................ 11

INSPECTOR GENERAL DISAGREEMENT .......................................................................... 11
ii

GAO LIASON .............................................................................................................................. 11

STRATEGIC PLAN FOR THE OFFICE OF THE INSPECTOR GENERAL ....................... 12

1. Investigative Agenda ...................................................................................................... 12

2. Legislative and Regulatory Review Agenda ................................................................ 12

3. Audit, Inspection, Evaluation and Review Agenda .................................................... 13

CONTACTING THE OFFICE OF THE INSPECTOR GENERAL ........................................ 15

TABLE 1 – REPORTS ISSUED WITH QUESTIONED COSTS ........................................... 16

TABLE 2 – REPORTS ISSUED WITH RECOMMENDATIONS THAT FUNDS BE PUT 

TO BETTER USE ........................................................................................................................ 17
iii

INDEX OF IG ACT REPORTING REQUIREMENTS 

Section 4(a)(2) Review of legislation and regulations................................................9

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...........8 

Section 5(a)(4) Matters referred to prosecutorial authorities....................................9 

Section 5(a)(5) Summary of instances where information was refused...................11 

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

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

Section 5(a)(8) Statistical Table—Questioned Costs.................................................16 

Section 5(a)(9) Statistical Table—Funds Recommended for Better Use..................17

Section 5(a)(10) Audit reports lacking management decision.....................................8

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

Section 5(a)(12) Significant management decisions where the IG disagrees.............11

Section 6(b)(2) Summary of reports to Chairman where assistance was refused.....11 
1

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 April 1, 2015, through September 30, 2015. During this period, OIG 

completed 2 audits, one management review (audit), one review (non-audit), and 2 

management letters (non-audit). OIG also began or continued work on 4 audits, 3

reviews (non-audit), and two investigations. 

OIG participated in training, visited CFTC field offices, and participated in 

Government-wide OIG professional and cooperative meetings and activities. The OIG 

hired an Audit Management Analyst, one part-time Attorney, and one full-time Law 

Clerk during the reporting period. 

Highlights of completed evaluations, investigations, and other projects include 

the following: 

 Performance audit to determine the extent to which CFTC employed individuals 

who may take advantage of the CFTC pay-scale to enhance their “high three” for 

retirement; i.e. “pension prizers” (September 24, 2015). We found that, while a 

relatively small number of employees have worked at CFTC for fewer than three 

and a half years prior to retirement, this practice is not systemic, and we made no 

recommendations. 

 Performance audit of the Division of Market Oversight’s rule enforcement 

reviews (August 5, 2015). Recommendations were made to ensure reviews 

include all CFTC core principles, selection procedures are enhanced, concerns, 

and review cycle times are reduced. 

 Management follow-up of the Federal Information Security Management Act FY 

2014 audit (July 14, 2015). In light of the extent of information security 

vulnerabilities, we made additional recommendations to provide the Chief 

Information Security Officer the authority and resources to drive actions that 

mitigate medium, high, and critical vulnerabilities; and to ensure the appropriate 

leadership structure is in place for effective vulnerability management. The 

extent of information security vulnerabilities is considered a significant 

management challenge. This report is not public. 

 Review of space utilization of the New York Regional Office of the Commodity 

Futures Trading Commission (June 18, 2015). We recommended that the CFTC 

consolidate staff on two full floors and negotiate a return of the half floor to the 

landlord. 

 

1

 P.L. 95-452, 92 Stat. 1101 (1987). 
2

We also issued two management letters. The first addressed the CFTC’s workplace 

violence policy and allegations of a lack of responsiveness by management to a perceived 

employee safety issue. This matter was resolved through proactive effort by senior 

management taken during our field work. The second addressed allegations of 

unprofessional conduct by a manager, and our office plans to follow up during the next 

reporting period. The management letters are non-public. 

Highlights of evaluations, investigations, and other projects started or continued 

this period include: 

 Financial statement audit of Agency Operations and another of the Customer 

Protection Fund. The objectives are to assess whether respective financial 

statements are presented fairly. 

 Financial related audit of Custodial Receivables. The objective is to assess and 

address financial statement reporting challenges. We plan to report on collection 

performance including asset discovery effectiveness in a subsequent report.

 Federal Information Security Management Act audit for FY 2015. This 

compliance audit measures the agency’s security practices to federal standards. 

 Review of CFTC’s Washington D.C. building lease. The objectives are to evaluate 

the cost effectiveness of CFTC’s decision to expand its lease and to assess whether 

the CFTC is overpaying for the space it occupies.

 Whistleblower Office Review. This review was initially begun in September 2014, 

halted in November 2014 due to competing priorities, and reopened during the 

present reporting period. Our goal is to determine the reason, if any, for the 

limited number of CFTC whistleblower awards compared to the SEC, and to 

recommend best practices in this area. 

 Office of the Chief Economist Follow-up Review. In February of 2014, we 

released a review of the CFTC’s decision to shut-down long-term research, bar 

publication of completed research, and eliminate 2/3rds of the economists 

affiliated with the Office of the Chief Economist shortly after receipt of an 

unsubstantiated allegation that trade data was being improperly accessed and/or 

published. We are following up to determine whether recommendations made in 

February 2014 were implemented. 

At the request of CFTC’s management, the OIG initiated an investigation that was 

ongoing at the end of the reporting period. In addition, we initiated an investigation 

after receiving an anonymous allegation that was also ongoing at the end of the 

reporting period. There was no peer review activity during the reporting period.
3

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,2 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 to 

better serve their vital function in the nation’s economy–providing a mechanism for 

price discovery and a means of offsetting price risks. The Dodd-Frank Act authorized 

the CFTC to regulate swap dealers and increase transparency in the derivatives 

marketplace. 

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. Within the Office of the Chairman there are Offices of Women 

and Minority Inclusion, Legislative Affairs, and Public Affairs. In addition to its 

headquarters office in Washington, D.C., 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 1978.3 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; 

 

2 Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), Pub. L. 111-203, 124 

Stat. 1376 (2010).

3

 Inspector General Act Amendments of 1988, P.L. 100-504, 102 Stat. 2515 (1988). 
4

 Conduct and supervise audits and investigations relating to the administration of 

CFTC programs and operations; 

 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.

4 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 in accordance with 

the Quality Standards for Inspection and Evaluation5 issued by the Council of 

Inspectors General for Integrity and Efficiency (CIGIE). 

OIG investigations are performed in accordance with the Quality Standards for 

Investigations6 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. 

OIG is a member of the Counsels of Inspectors General on Financial Oversight 

(CIGFO), created under the Dodd-Frank Act to examine the work of the Financial 

Stability Oversight Council (FSOC). 

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, inspection, evaluation, review, or audit. Our investigations have 

 

4

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

standards are available at: http://gao.gov/assets/590/587281.pdf. 

5

 Available at: https://www.ignet.gov/sites/default/files/files/committees/inspect-eval/iestds12r.pdf. 

6 Available at http://www.ignet.gov/pande/standards/invstds.pdf. 
5

been pursued regardless of the rank or party affiliation of the target. OIG also 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.7 

3. OIG Resources 

At the end of the reporting period, the CFTC OIG consisted of 9.5 full-time 

equivalents: the Inspector General, Deputy Inspector General/Chief Counsel, Assistant 

Inspector General for Auditing, two Attorney-Advisors, one Law Clerk, two Auditors, 

one Senior Program Analyst, and an Audit Management Analyst. The Audit 

Management Analyst, part-time Attorney and Law Clerk joined our staff during the 

reporting period. 

COMPLETED AUDITS, INSPECTIONS, EVALUATIONS, 

REVIEWS and OTHER PROJECTS 

During this period, OIG completed 2 audits, one management review (audit), one review 

(non-audit), and 2 management letters (non-audit). 

1. Performance Audit: Pension Prizers

Our objective was to determine the extent to which CFTC employed individuals who 

may take advantage of the CFTC pay-scale to enhance their “high three” for retirement; 

i.e. “pension prizers.” We examined available personnel information for over 800 CFTC 

employees hired since 2004. We concluded that there was no indication that 

individuals serving the CFTC for fewer than three and a half years to enhance their 

retirement is a systemic practice. 

2. Performance Audit of the Division of Market Oversight’s Rule 

Enforcement Reviews (RER)

This audit noted the Division of Market Oversight (DMO) is not conducting rule 

enforcement reviews of all core principles. When 16 of 23 core principles are not 

reviewed, it may hamper DMO’s ability to meet CFTC’s strategic goal of promoting 

market integrity and transparency. In addition, procedures for selecting designated 

contract markets (DCM) for a RER needs to be improved. When 9 of 20 DCMs are not 

reviewed, there is a risk of noncompliance with the Commodity Exchange Act. Further, 

follow-up procedures on concerns and recommendations made in prior RER reports 

need to be enhanced. Without robust follow-up, there is the risk that DCMs will not 

 

7

 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

address reported concerns and recommendations timely. Lastly, inadequate staffing 

leads to lengthy RER completion time. When completion time averages 591 days, DMO 

risks that it will not effectively fulfill its business objective of market oversight. 

Recommendations were made to the DMO Market Compliance Branch to (1) implement 

operating procedures that ensure DCMs comply with all Core Principles; (2) enhance 

documentation of its procedures for selecting DCMs to be reviewed; (3) strengthen 

procedures for following up promptly on all concerns and recommendations issued to a 

DCM; and (4) take steps to reduce average time between rule enforcement reviews. 

Management generally concurred with the findings and recommendations and noted 

budget constraints for staffing limitations. 

3. FY 2014 FISMA Follow-up Management Review 

On February 2, 2015, the Office of Inspector General (OIG) reported the results of the 

Fiscal Year (FY) 2014 U.S. Commodity Futures Trading Commission (CFTC) compliance 

with Federal Information Security Management Act of 2002 (FISMA). In that report we 

recommended, among other recommendations, that the CFTC timely mitigate 

vulnerabilities discovered during penetration testing. This management follow-up 

highlighted the extent of vulnerabilities associated with the vast majority of servers and 

network users, including the Chairman and Commissioners, and that the leadership 

structure for the Chief Information Security Officer (CISO) could better align to meet 

FISMA requirements. We recommended the Chief Information Officer provide the CISO 

the authority and resources to drive actions that mitigate medium, high and critical, 

vulnerabilities identified and ensure the appropriate leadership structure is in place for 

effective vulnerability management. CFTC management concurred with both 

recommendations. Due to the sensitivity of the detailed vulnerabilities, the report is not 

posted on our website. 

4. Review of Space Utilization of the New York Regional Office of the 

Commodity Futures Trading Commission

The CFTC Eastern Regional Office (ERO) in New York City had a current occupancy rate 

of approximately 62% (as of April 2015) on two and a half floors. Based on current 

staffing levels, and the fact that the CFTC did not plan to appreciably increase staff in 

the ERO through the end of FY 2015, we recommended that the CFTC seek to reduce 

lease expenditures by subleasing or negotiating a return of space to the landlord. We 

identified only a few areas where limited remodeling or construction might increase 

office efficiency, including two rooms on the 18th floor that had apparently been 

abandoned or forgotten by Agency management in New York. We also recommended

that the CFTC be mindful of its existing space, and if it determines to maintain leased 

space on the 18th floor, to convert that area into something useable. 

5. Two Management Letters 

We issued two Management Letters. The first addressed the CFTC’s workplace violence 

policy and allegations of a lack of responsiveness by management to a perceived 
7

employee safety issue. This matter was resolved through proactive effort by senior 

management taken during our field work. The second addressed allegations of 

unprofessional conduct by a manager, and our office plans to follow up during the next 

reporting period. The management letters are non-public. 

CURRENT AUDITS, INSPECTIONS, EVALUATIONS, 

REVIEWS, and OTHER PROJECTS 

At the end of this reporting period, OIG began or continued work on 4 audits, 3 reviews 

(non-audit), and two investigations. . 

1. Financial Statement Audit: Agency Operations FY 2015 

The audit objective is to render an opinion of the Agency financial statement 

presentation. KPMG LLC was contracted to render the opinion.

2. Financial Statement Audit: Customer Protection Fund FY 2015 

The audit objective is to render an opinion of the Customer Protection Fund financial 

statement presentation. Williams Adley, LLC, was contracted to render the opinion.

3. Financial Related Audit: Custodial Receivables

The objective is to assess asset discovery effectiveness of the Custodial Receivables. We 

will address financial statement reporting challenges separately from collection 

performance, including asset discovery effectiveness.

4. Federal Information Security Management Act Audit 

This compliance audit measures the agency’s security practices to federal standards.

5. Review: CFTC’s Washington D.C. Building Lease

The objectives are to evaluate the cost effectiveness of CFTC’s decision to expand its 

lease and to assess whether the CFTC is overpaying for the space it occupies.

6. Whistleblower Office Review 

This review was started in September 2014, halted due to competing priorities, 

and reopened during the present reporting period. Our goal is to determine the 

reason, if any, for the limited number of CFTC whistleblower awards compared to 

the SEC, and to recommend best practices in this area.

7. Office of the Chief Economist Follow-up Review

In February of 2014, we released a review of the CFTC’s decision to shut down 

long-term research, bar publication of completed research, and eliminate 2/3 of 

the economists affiliated with the Office of the Chief Economist after receipt of an 

unsubstantiated allegation that trade data was being improperly accessed and/or 

published. We recommended that the Agency take immediate action to 

reinvigorate the Office of the Chief Economist, bring back outside academics, and 

to support long-term economic research. We also stated that we would follow-up 
8

in approximately one year. Work on this follow-up review was ongoing at the 

close of the reporting period. 

There was no peer review activity during the reporting period.

AUDIT REPORTS and REVIEWS OVER SIX MONTHS 

OLD 

1. Corrective Action not Completed

There are no 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 not 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. 

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. 

Two investigations were begun during this reporting period and were pending at the end 

of this reporting period. We initiated the first at the request of CFTC’s management. 

We initiated the second after receiving an anonymous allegation. 
9

SUMMARY OF MATTERS REFERRED TO 

PROSECUTORIAL AUTHORITIES 

 

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

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 
10

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. 

PEER REVIEWS 

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

Council of Inspectors General on Integrity and Efficiency describes the processes for 

audits and investigative peer reviews on its website 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. 

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. 

The most recent peer review of CFTC OIG’s audit operations was completed on 

April 22, 2014. CFTC OIG received a rating of pass with deficiencies. The most recent 

peer review of the CFTC OIG’s investigative function was completed on March 27, 2013. 

CFTC OIG received a rating of pass. 
11

No peer review activities took place during the reporting period and there are no 

outstanding recommendations from prior peer reviews that have not been implemented. 

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. 

SUMMARY OF EACH REPORT MADE TO THE AGENCY 

HEAD 

No reports were made to the Agency head under section 6(b)(2) of the IG Act 

concerning information or assistance unreasonably refused or not provided (mandated 

under section 5(a)(5) of the IG Act 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. 

GAO also conducts audits of CFTC activities, and OIG insures effective 

coordination and cooperation. 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. 
12

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 

has been 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 can easily reach OIG, our office has a 24-

hour hotline to receive complaints. The hotline phone number is (800)913-7404. 

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

agenda has been established. 

2. Legislative and Regulatory Review Agenda 

Because of the importance of legislative and regulatory review in a financial and 

economic regulatory Agency, OIG reviews proposed and final CFTC regulations, 

legislation and selected exchange rules using six basic criteria, including whether the 

Agency has: (1) identified specifically the problem(s) to be addressed by the proposal; 

(2) defined through case study or data analysis a clear link between the proposed 

solution and the identified problem(s); (3) specified clearly the means to effectively and 

efficiently enforce the proposal; (4) assessed the likely efficiency and effectiveness of 

alternative solutions; (5) has reasonably documented that the proposal will yield 

positive net benefits over the long term; and (6) 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 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 
13

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 in 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 year in accordance with generally accepted auditing 

standards, Government Auditing Standards and OMB Bulletin 07-04. 
14

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. To this end, OIG has engaged a contractor to 

perform the 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. OIG is aware of 

the immense regulatory undertaking required under the Dodd-Frank Act, and will seek 

to identify issues and to conduct inspections, reviews, investigations and other activities 

relating to these management and regulatory challenges. 

To facilitate our direction and identify emerging issues, in FY2016 OIG will 

engage in cloud-based data mining of public information. Public comments and press 

releases posted on the CFTC Website are data-rich, and we will use text mining on the 
15

CFTC website to determine emerging issues with potential to enable OIG to identify 

fraud, waste, abuse, as well as other inefficiencies. The CFTC Analytic Request Project 

will help organize and analyze valuable data and help identify potential gaps between 

law, regulations and the mission of CFTC OIG. For instance, data mining will facilitate 

an understanding of gaps between comments posted on the CFTC website by the public 

in response to proposed rulemakings, and the work completed by CFTC. 

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. 

e. Resources Required

Because OIG resources can be diverted at any time to an investigation, audit, 

inspection, 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 not possible to forecast with complete accuracy how resources 

will be utilized from year to year. OIG estimates that approximately five 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. We estimate four 

staff years of effort will be devoted over each of the next five years to the investigative, 

legislative and regulatory review functions. We estimate one staff year for management, 

administrative, and outreach efforts. 

During FY 2015 we hired one part-time attorney and one full-time law clerk bringing 

our existing legal/investigative staff from two (including the Deputy IG/Chief Counsel) 

to 3.5. We also hired one additional full time Audit Management Analyst, bringing our 

audit staff to 5 (including the AIGA). Due to staff size, we will continue to utilize outside 

independent auditors to perform OIG audits and other services 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 1(800)913-7404. The OIG web page is located at 

http://www.cftc.gov/About/OfficeoftheInspectorGeneral/index.htm. 
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TABLE 1 – REPORTS ISSUED WITH QUESTIONED 

COSTS 

April 1, 2015 – September 30, 2015 

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
17

TABLE 2 – REPORTS ISSUED WITH 

RECOMMENDATIONS THAT FUNDS BE PUT TO 

BETTER USE 

April 1, 2015 – September 30, 2015 

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