Office of the 

Inspector General 

TO: 

FROM: 

U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 

1155 21st Street, NW, Washington, DC 20581 

Telephone: (202) 418-5000 

Facsimile: (202) 418-5521 

www.cftc.gov 

MEMORANDUM 

Timothy G. Massad, Chairman .n '-Q 

A. Roy Lavik, Inspector General 0 \ ~ d--

DATE: October 0 I, 20 14 

SUBJECT: CFTC-OIG Performance Audit- Managemenl 's Use of Information 

Technology Resources in Support of its Strategic Plan and Regulatmy 

Responsibilities 

Attached is the Commodity Futures Trading Commission's Offi ce of the Inspector 

General's (OIG) audit report on 

Management's Use of IT Resources in Support of its Strategic Plan and Regulatory 

Responsibilities. 

My office contracted with an Independent Public Acco unting (IPA) firm to conduct this 

performance audit. We monitored the IPA's work and concur with the results of this audit. 

Should you have any questions regarding this report, please do not hesitate to contact me. 

I appreciate the courtesy and cooperati on that the staff in the Office of Data and 

Technology extended to my staff and contractors during this audit. 
Clifton LarsonAllen 

U.S. COMMODITY FUTURES TRADING COMMISSION 

Report on 

Management's Use of Information Technology Resources in Support 

of its Strategic Plan and Regulatory Responsibilities 
TABLE OF CONTENTS 

INTRODUCTION ....................................................................................................................... 1 

BACKGROUND ......................................................................................................................... 1 

SUMMARY OF RESULTS ......................................................................................................... 1 

SCOPE AND METHODOLOGY ................................................................................................. 3 

MANAGEMENT'S RESPONSE ................................................................................................. 5 

ABBREVIATIONS 

CFTC 

CLA 

CEA 

DFA 

FY 

OIG 

ODT 

IT 

U.S. Commodity Futures Trading Commission 

CliftonlarsonAIIen LLP 

Commodity Exchange Act 

Dodd-Frank Wall Street Reform and Consumer Protection Act 

Fiscal Year 

Office of the Inspector General 

Office of Data and Technology 

Information Technology 
. INTRODUCTION 

The U.S. Commodity Futures Trading Commission (CFTC) was created by the Congress in 

197 4 as an independent agency with a mandate to regulate commodity futures and option 

markets in the United States. Its mission is to protect market participants and the public from 

fraud, manipulation, abusive practices, and systemic risk related to derivatives-both futures 

and swaps-and to foster transparent, open, competitive, and financially sound markets. In 

carrying out its mission and to promote market integrity, CFTC polices the derivatives markets 

for various abuses and works to ensure the protection of customer funds. The agency also 

seeks to lower the risk of the futures and swaps markets to the economy and the public. CFTC's 

fiscal years (FYs) 2011, 2012, and 2013 total budgetary resources from its audited financial 

statements approximated $230 million, $325 million, and $308 million, respectively. 

CliftonLarsonAIIen LLP (CLA) was engaged by CFTC's Office of the Inspector General {OIG) to 

conduct an audit of CFTC management's use of information technology {IT) resources in 

support of its strategic plan and regulatory responsibilities under the Commodity Exchange Act 

(CEA) and Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA). The objective 

of this audit was to determine the highest IT priorities documented in CFTC's draft IT acquisition 

plan and spend plans for FYs 2011 through 2013. In addition, we reviewed the various 

categories the agency targeted for spending (i.e. IT advisory and assistance services, including 

new software development for market surveillance, IT supplies and materials, IT equipment 

operations and maintenance, etc.); evaluated the consistency of the prioritized IT activities with 

CFTC's strategic plan; and determined whether the deliverables associated with these IT 

projects were on schedule to meet contract objectives for FY 2011 through 2013. Our audit is 

limited to the spending prioritization specified in CFTC's draft acquisition plan on IT for the FYs 

2011 through 2013. 

BACKGROUND 

CFTC's Office of Data and Technology (ODT) has primary responsibility for establishing and 

executing technology and data management support for CFTC's market and financial oversight, 

surveillance, enforcement, legal, and public transparency activities. ODT also provides general 

network, communication, storage, computing, and information technology management 

infrastructure and services. 

SUMMARY OF RESULTS 

Our audit found that CFTC management's use of funds targeted for the highest priority was 

generally consistent with its draft IT strategic plan and spend plans as updated for FY 2011 

through 2013. Our analysis of a representative sample of contracts showed that CFTC 

management monitored the performance of their contractors in accordance with those contracts' 

milestone deliverables in support of its CFTC strategic goals. In addition, we observed that the 

ODT spent over 63% of its IT budget on IT advisory and assistance services each year from FY 

2011 through 2013. On a sample basis, we reviewed the largest contracts covering 

approximately 57%, 60% and 49°A» of the total IT spending for FY 2011, FY 2012, and FY 2013, 

respectively, and their related task orders included in the aforementioned category. We found 

the following: 

1 
FY 11 

Staff augmentation and hardware enhancements as well as software licenses represented 

approximately 27% of the contracts reviewed. The remaining 73%, represented software 

modernization and surveillance enhancements. 

FY12 

Staff augmentation and hardware enhancements as well as software licenses represented 

approximately 42% of the contracts reviewed. The remaining 58% represented software 

modernization and surveillance enhancements. 

FY13 

Staff augmentation and hardware enhancements as well as software licenses represented 

approximately 50°/o of the contracts reviewed. The remaining 50°k represented software 

modernization and surveillance enhancements. 

The dollar and percentage breakout of CFTC's IT spending between the two largest IT 

categories: staff augmentation, hardware enhancements and software licenses, and software 

modernization and surveillance enhancements are shown in Table 1. 

Table 1: CFTC IT Spending, Fiscal Years (FYs) 2011,2012 and 2013 (unaudited) 

'FY2011 Percentage FY2012 Percentage FY 2013 Percentage· 

Amount of Total Amount ofTot~l Amount .. ofTotal 

Spending Spending Spending · 

Staff 

augmentation, 

hardware 5,891,775 27°/o 11,447,971 42°k 10,408,392 50% enhancements, 

and software 

licenses 

Software 

modernization 

and 15,848,809 73% 15,748,465 58°k 10,368,493 50% 

surveillance 

enhancements 

Total 

Spending 21,740,584 1000_4, 27,196,436 1000_4, 20,776,885 100o/o 

Analyzed 

Total 

Obligations for 37,853,408 45,404,675 42,010,035 

ODT 

%evaluated 57°k 600!{, 49°k 

Source: CFTC Office of Data & Technology Actual Obligations- FY 2011, 2012 and FY 2013 

Information Technology Budget, unaudited data. 

2 
Other Observation (unaudited) 

Table 2: CFTC information technology resources appropriated and obligated by fiscal 

year (unaudited) 

FY 11 FY12 FY 13 

Appropriations* 202,675,000 205,294,000 205,294,000 

Appropriation for IT 37,200,000*** 55,000,000 55,000,000 investments 

Obligated: 

Operations 37,853,408 45,404,675 42,010,035 

Other** 253 016 322.784 100 504 

Total Obligations 38,106,424 45,727,459 42,110,539 

* Amounts are specific to the original pubic law and do not include rescissions, adjustments, etc. 

** This category includes staff training, incentive awards travel, etc. 

***Public law states "that not less than $37.2 million shall be for the highest priority information 

technologies of the Commission." The aforementioned amount represents the lowest amount 

available to obligate. However, CFTC had the authority to obligate additional funding for IT 

efforts. 

Source: CFTC ODT Actual Obligations and Expenditures detail by fiscal year, unaudited data. 

Also, the amounts reported as appropriated are pursuant to CFTC's appropriations for each 

fiscal year. 

The total full time equivalents and the related salaries and expenses to carry out the ODT IT 

strategy and objectives by fiscal year are shown in Table 3. 

Table 3: CFTC Full-Time Equivalents (FTEs) 

FY 2011 FY 2012 FY 2013 

ODT personnel 80* 83* 83* 

Salaries and 12,259,889 14,602,091 15,017,021 Expenses 

Source: *Fiscal Year's 2013, 2014 and 2015 President's Budget, unaudited data 

SCOPE AND METHODOLOGY 

Our audit was limited to evaluating CFTC management's use of its IT resources in relation to its 

draft IT acquisition plan and spend plans for FYs 2011 through 2013. We reviewed CEA and 

DFA provisions, as well as CFTC's draft IT acquisition plan, IT spend plans, and IT policies and 

procedures, including the Project Management Life Cycle and related narratives and flowcharts. 

In addition, we selected a sample of contracts from FYs 2011 through 2013 to evaluate 

evidence of CFTC management's monitoring of the agency's performance during the target 

period in support of specific IT objectives. We interviewed key officials within ODT about 

3 
planning and executing the IT investment strategy in relation to legislation such as CEA, DFA, 

and CFTC's strategic plan and other CFTC guidance. 

We conducted this performance audit in accordance with Government Auditing Standards, 

issued by the Comptroller General of the United States. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for 

our conclusion based on our audit objective. We believe that the evidence obtained provides a 

reasonable basis for our conclusion. 

This report is intended solely for the information and use of CFTC's management and OIG, and 

is not intended to be, and should not be, used by anyone other than these specified parties. 

Calverton, Maryland 

September 8, 2014 

4 
MANA.GEMENT'S RESPONSE 

U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 

Office of Data & Technology 

ELECTRONIC MAIL 

1155 21st Street, NW, Washington, DC 20581 

Telephone: (202) 418-5000 

Facsimile: (202) 418-5521 

www.cffc. gov 

MEMORANDUM 

TO: A. Roy Lavik, Inspector General 

FROM: Jotm L. Rogers, Chief Infonnation Officer 

DATE: September 30,2014 

SUBJECT: CFTC OIG Report on Managemenfs Use oflnfonnation Tectmology 

Resomces in Support of its Strategic Plan and Regulatory 

Responsibilities 

The Office of Data and Teclmology concurs with the results of the report and will 

continue to prioritize the use of infonnation tectmology (IT) resources in accordance with CFTC 

strategic and CFTC IT strategic plans. 

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