On November 25, 2002, President Bush signed the Homeland Security Act of 2002, as amended, officially establishing DHS, with the primary mission of protecting the American homeland. DHS became operational on January 24, 2003. On March 1, 2003, under the President’s reorganization plan, 22 agencies and approximately 181,000 employees were transferred to the new department. DHS is currently organized into the components shown in table 1, seven of which are referred to as key operational components. According to DHS, the seven key operational components lead the department’s frontline activities to protect the nation. The other remaining DHS components provide resources, analysis, equipment, research, policy development, and support to ensure that the frontline organizations have the tools and resources to accomplish the DHS mission. The department’s five key mission areas are (1) preventing terrorism and enhancing security, (2) securing and managing the nation’s borders, (3) enforcing and administering the nation’s immigration laws, (4) safeguarding and securing cyberspace, and (5) ensuring resilience to disasters. In fiscal year 2013, DHS had about 226,000 full-time equivalent staff, and its budgetary resources totaled approximately $91 billion. Over three decades ago, Congress established independent IG offices throughout the federal government as a result of growing reports of serious and widespread internal control breakdowns resulting in monetary losses and reduced effectiveness or efficiency in federal activities. The IG Act established IG offices at major departments and agencies, including DHS, to prevent and detect fraud, waste, abuse, and mismanagement in their agencies’ programs and operations; to conduct and supervise audits, inspections, and investigations; and to recommend policies to promote economy, efficiency, and effectiveness. As required by the IG Act, the DHS IG is presidentially appointed and confirmed by the Senate. The DHS OIG consists of several different component offices, as described in table 2. The IG Act provides specific protections to IG independence that are necessary largely because of the unusual reporting requirements of the IGs, who are subject to the general supervision and budget processes of the agencies they audit while at the same time being expected to provide independent reports of their work to Congress. Protections to IG independence include a prohibition on the ability of the agency head to prevent or prohibit the IG from initiating, carrying out, or completing any audit or investigation. This prohibition is directed at helping to protect the OIG from external forces that could compromise its independence. Although these protections apply to the DHS OIG, exceptions exist for the Secretary of DHS when certain sensitive information or situations are involved.independent to knowledgeable third parties is also critical when the IG makes decisions related to the nature and scope of audit and investigative work performed by the OIG. The IG’s personal independence and the need to appear An independent and reliable OIG structure firmly established at federal agencies is important for ensuring effective oversight of programs and operations. Auditors who work for OIGs are required to adhere to independence standards included in Government Auditing Standards, also known as generally accepted government auditing standards. Government Auditing Standards states that an audit organization and individual auditor must be free from impairments to independence and must avoid the appearance of an impairment. Auditors and audit organizations must maintain independence so that their opinions, findings, conclusions, judgments, and recommendations will be impartial and be viewed as impartial by objective third parties with knowledge of the relevant information. This requires staff to act with integrity, exercise objectivity and professional skepticism, and avoid circumstances or threats to independence that would cause a reasonable and informed third party to believe that an OIG’s work had been compromised. In addition, to the extent legally permitted and not inconsistent with Government Auditing Standards, federal OIGs are required, as appropriate, to adhere to the quality standards promulgated by CIGIE. These standards include requirements for OIGs, including OIG employees who work on investigations and inspections, to maintain their independence. For additional information on quality and independence standards for OIGs, see appendix II. GAO-12-331G. During fiscal years 2012 and 2013, the DHS OIG issued 361 audit and inspection reports. These reports provided coverage of all DHS key operational components, management challenges, and high-risk areas. According to the OIG, the majority of its audits and inspections were performed in response to congressional mandates or requests, while others were planned by the OIG based on factors such as the department’s strategic plan, which identifies strategic missions and priorities, and by the OIG’s annual performance plan and major management challenges identified for the department. Our review of issues addressed in the DHS OIG’s audit and inspection reports issued during fiscal years 2012 and 2013 found that the OIG provided oversight of all components that DHS has identified as its key operational components. In addition, several OIG reports covered other DHS components, multiple components, and department-wide issues, as shown in table 3. As table 3 illustrates, the majority of the OIG’s audit and inspection reports issued in fiscal years 2012 and 2013 addressed issues at the Federal Emergency Management Agency (FEMA). Specifically, 200 of these reports (55 percent) pertained solely to FEMA. Of these 200 reports, 166 reports involved audits of FEMA grants, including 118 reports on Disaster Assistance Grants. According to OIG officials, the large number of FEMA audits can be attributed to a number of factors. For example, the OIG has a statutory mandate to annually conduct audits of a sample of states and high-risk urban areas that receive grants administered by DHS to prevent, prepare for, protect against, or respond to natural disasters, acts of terrorism, and other disasters.FEMA’s programs are considered to have a higher financial risk than those of other DHS components because it distributes disaster relief funds to so many communities nationwide—for example, as of May 2014, over 135,000 applicants (e.g., local governments and nonprofit In addition, organizations to which public assistance funds are awarded) were receiving disaster assistance. Moreover, FEMA has the largest budget of all DHS components, with total budgetary resources of over $36 billion for fiscal year 2013, or about 38 percent of the department’s total budget. In addition, the OIG received $27 million from the Disaster Relief Fund in fiscal year 2013 specifically for conducting audits and investigations related to disasters. Of the 361 audit and inspection reports issued during fiscal years 2012 and 2013, we found that 355 OIG reports pertained to the department’s management challenges reported by the OIG. OIGs began annually identifying management challenges (i.e., what the IG considers to be the most serious management and performance challenges facing the agency) for their respective departments or agencies in 1997 at the request of Congress and continue to do so based on requirements of the Reports Consolidation Act of 2000.to include their IGs’ lists of significant management challenges in their annual performance and accountability reports to the President, the Office of Management and Budget, and Congress. DHS reports this information in its annual agency financial report. As shown in table 4, the OIG reports issued during fiscal years 2012 and 2013 covered all nine management challenges identified for that time period. The DHS OIG’s organizational structure includes all of the positions required by the IG Act, as well as several nonstatutory positions that help the OIG carry out its responsibilities. According to the OIG, changes to the OIG’s structure made during fiscal year 2013 were intended to help further strengthen its organizational independence. The OIG also has policies and procedures designed to carry out most of the responsibilities required by the IG Act. However, we identified three areas—coordinating with the FBI, protecting employees’ identities, and obtaining legal advice—in which the OIG’s policies and procedures could be improved to better meet its responsibilities. The IG Act requires that each OIG have certain specific positions in its organization. First, for cabinet departments and certain major agencies, it requires that each OIG be headed by an IG appointed by the President and confirmed by the Senate. The act also requires that each IG appoint or designate certain other positions, including an Assistant IG (AIG) for Audits, an AIG for Investigations, and a Whistleblower Protection Ombudsman. The IG Act also requires that each IG obtain legal advice from a counsel either reporting directly to the IG or to another IG. In addition, a special provision for the DHS OIG requires the IG to designate a senior official to carry out responsibilities related to receiving and investigating complaints that allege abuses of civil rights or civil liberties. The DHS OIG has all of the positions required by the IG Act, which are highlighted in the OIG’s organization chart in figure 1. For example, the DHS OIG has its own Office of Counsel, which is currently headed by a Deputy Counsel to the IG. Furthermore, in January 2012, the OIG issued a policy directive that designated the position of the AIG for Investigations as the Civil Rights and Civil Liberties Coordinator for investigative matters. In November 2012, the former Acting IG designated an individual within the Office of Investigations as the acting Whistleblower Protection Ombudsman with a goal of improving the availability of whistleblower protection information to employees throughout the department. In August 2013, after this function was transferred to the Office of Integrity and Quality Oversight (IQO), the same person became the permanent Whistleblower Protection Ombudsman. The DHS OIG has created several other senior positions in addition to those required by the IG Act, which are also shown in figure 1. As of July 2014, these positions include the Deputy IG and Chief of Staff within the OIG executive office, who provide executive leadership to the OIG. In addition, the OIG has AIGs to lead its Offices of Emergency Management Oversight, Information Technology Audits, Inspections, Integrity and Quality Oversight, and Management.