The State OIG, as currently constituted, was established by the Omnibus Diplomatic Security and Antiterrorism Act of 1986, which expanded on the 1985 amendments to the Inspector General Act of 1978 (IG Act), as an independent office to prevent and detect fraud, waste, abuse, and mismanagement in the department’s programs and operations; conduct and supervise audits and investigations; and recommend policies to promote economy, efficiency, and effectiveness. The State OIG is unique among federal inspectors general in its history and responsibilities due to a statutory requirement for the OIG to provide inspections of the department’s bureaus and posts worldwide. From 1906 until 1957, inspections were to be carried out at least once every 2 years and were viewed as a management function, and not a function of an independent inspector general. In 1957, the State Department administratively established an Inspector General of Foreign Service, which was the first inspector general office within the State Department to conduct inspections. Congress enacted legislation in 1961 and in 1980 creating statutory inspectors general who were tasked with performing inspections on certain State Department activities. In 1978, GAO reviewed the IG’s inspection reports and questioned the independence of Foreign Service officers who were temporarily detailed to the IG’s office and recommended the elimination of this requirement. The 1980 legislation, section 209(a) of the Foreign Service Act, required the State IG to inspect every foreign service post, bureau, or other operating unit in the State Department at least once every 5 years. In 1982, we reviewed the IG’s operations and noted that the 5-year inspection cycle led to problems with the IG’s effectiveness by limiting the ability to do other work. In addition, we continued to question the use of Foreign Service officers and other persons from operational units within the department to staff the IG office. In 1986, reacting to concerns similar to those expressed in our 1982 report, Congress made the State IG a presidentially appointed inspector general subject to the Inspector General Act and prohibited a career member of the Foreign Service from being appointed as the State IG. Starting in 1996 and continuing until today, Congress, in the Department of State appropriations acts, annually waives the 5-year statutory requirement for inspections. However, while the inspection requirement is waived annually by Congress, the State IG continues to conduct inspections as part of its plan for oversight of the department. The State OIG’s inspection responsibilities encompass a wide range of objectives, which include reviewing whether department policy goals are achieved and whether the interests of the United States are represented and advanced effectively. In addition, the State OIG is assigned responsibility for specialized security inspections in support of the department’s mission to provide effective protection to its personnel, facilities, and sensitive intelligence information. Inspections are defined by the Council of the Inspectors General on Integrity and Efficiency (CIGIE) as a process that evaluates reviews, studies, and analyzes the programs and activities of an agency for the purposes of providing information to managers for decision making; making recommendations for improvements to programs, polices, or procedures; and identifying where administrative action may be necessary. There are fundamental differences between inspections and audits. Inspections and audits are typically conducted under separate standards with different basic requirements. That is, IGs are required by the IG Act to conduct audits in accordance with Government Auditing Standards (also known as generally accepted government auditing standards). In contrast, the IGs follow CIGIE’s Quality Standards for Inspection and Evaluation when conducting inspections as required by law. By d audits performed under Government Auditing Standards are subject to more in-depth requirements for levels of evidence and documentation supporting the findings than are inspections performed under CIGIE’s inspection standards. Also, auditing standards require external quality reviews of audit organizations (peer reviews) on a 3-year cycle, while inspection standards do not require such external reviews. According to CIGIE, inspections provide the benefits of a flexible mechanism for optimizing resources, expanding agency coverage, and using alternative review methods and techniques. However, as reported by a recent peer review performed by the National Aeronautics and Space Administration (NASA) IG, the State OIG’s Middle East Regional Office did not always provide audits consistent with generally accepted government auditing standards (GAGAS). Consequently, because these audits were not performed in accordance with GAGAS, they were reclassified by the OIG as inspections. Independence is a fundamental principle to the auditing profession and the most critical element for IG effectiveness. Without independence, an audit organization cannot conduct independent audits in compliance with generally accepted government auditing standards. Likewise, an IG who lacks independence cannot effectively fulfill the full range of requirement of the office. Lacking this critical attribute, an audit organization’s wor might be classified as studies, research re ports, consulting reports, or reviews, rather than independent audits. Quality Standards for Federal Offices of Inspector General adopted by CIGIE includes requirements for IG independence. Specifically, IG their staff must be free both in fact and appearance from personal, external, and organizational impairments to their independence. The IG s and their staff have a responsibility to maintain independence so that opinions, conclusions, judgments, and recommendations will be im and viewed as impartial by knowledgeable third parties. Likewise, Government Auditing Standards states: “in all matters relating to work, the audit organization and the individual auditor, whether government or public, must be free from personal, external, and organizational impairments to independence and must avoid the appearance of such impairments to independence. Auditors and audit organizations must maintain independence so that their opinions, find conclusions, judgments, and recommendations will be impartial and viewed as impartial by objective th ird parties with knowledge of the relevant information.” Personal independence applies to individual auditors at all levels o audit organization, including the head of the organization. Personal independence refers to the auditor’s ability to remain objective and maintain an independent attitude in all matters relating to the audit, as well as the auditor’s ability to be recognized by others as independent. The es not auditor is to have an independent and objective state of mind that do allow personal bias or the undue influence of others to override the auditor’s professional judgments. This attitude is also referred to as intellectual honesty. The auditor must also be free from direct financial or managerial involvement with the audited entity or other potential c of interest tha independent. t might create the perception that the auditor is not The IG’s personal independence and appearance of independence to knowledgeable third parties is critical to IG decision making related to th he nature and scope of audit and investigative work to be performed by t IG office. The IG’s personal independence must be maintained when conducting any audit and investigative work and when making decisions to pursue and the nature and scope of the to determine the type of work individual audits themselves. External independence refers to both the auditor’s and the audit organization’s freedom to make independent and objective judgmen o from external influences or pressures. Examples of impairments t external independence include restrictions on access to records, government officials, or other individuals needed to conduct the audit; external interference over the assignment, appointment, compensation, promotion of audit personnel; restrictions on funds or other resou provided to the audit organization that adversely affect the audit organization’s ability to carry out its responsibilities; or external authority rces to overrule or to inappropriately influence the auditors’ judgment as to appropriate reporting content. The IG Act provides the IGs with protections against impairments to external independence by providing that IGs have access to all agency documents and records, prompt access to the agency head, and the authority to independently (1) select and appoint IG staff, (2) obtain services of experts, and (3) enter into contracts. The IGs may choose whether to exercise the act’s specific authority to obtain access to information that is denied by agency officials. In addition, the IG Act granted the IGs additional insulation from impairment of external independence by requiring that IGs report the results of their work in semiannual reports to Congress without alteration by their respective agencies, and that these reports generally are to be made available to the general public. The IG Act also directed the IGs to keep their agency heads and Congress fully and currently informed of any deficiencies, abuses, fraud, or other serious problems relating to the administration of programs and operations of their agencies. Also, the IGs are required to report particularly serious or flagrant problems, abuses, or deficiencies immediately to their agency heads, who are required to transmit the IG’s report to Congress within 7 calendar days. Organizational independence refers to the audit organization’s placement in relation to the activities being audited. Professional auditing standards have different criteria for organizational independence for external and internal audit organizations. The IGs, in their statutory role of providing oversight of their agencies’ operations, represent a unique hybrid including some characteristics of both external and internal reporting responsibilities. For example, the IGs have external-reporting requirements outside their agencies, such as to the Congress, which are consistent with the reporting requirements for external auditors. At the same time the IGs are part of their respective agencies and must also keep their agency heads, as well as the Congress, concurrently informed. The IG Act provides specific protections to the IGs’ organizational independence including the requirement that IGs report only to their agency heads and not to lower-level management. The head of the agency may delegate supervision of the IG only to the officer next below in rank, and is prohibited from preventing the IG from initiating, carrying out, or completing any audit or investigation. In addition, IGs in large federal departments and agencies, such as the State Department, are appointed by the President and confirmed by the Senate. Only the President has the authority to remove these IGs and can do so only after explaining the reasons to the Congress 30 days before taking action.