(EST PUB DATE) SEMIANNUAL REPORT TO THE DIRECTOR OF CENTRAL INTELLIGENCE

• Document Type: FOIA
• Keywords: IG SEMI ANNUAL
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0001344685
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 90
• Document Creation Date: June 24, 2015
• Document Release Date: April 14, 2011
• Case Number: F-2007-00194
• Publication Date: June 1, 2001

JANUARY - JUNE 2001
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-51PeRE-T-06
Central Intelligence Agency
Inspector General
SEMIANNUAL REPORT
TO THE DIRECTOR OF CENTRAL INTELLIGENCE
APPROVED FOR RELEASED DATE:
25-Feb-2010
Acting inspector beneral
(b)(1)
(b)(2)
(b)(3)
(b)(5)
(b)(6)
TABLE OF CONTENTS
PAGE
A MESSAGE FROM THE ACTING INSPECTOR GENERAL 1
(U) STATUTORY REQUIREMENTS 5
(U) AUDITS 9
SIGNIFICANT COMPLETED AUDITS AND OTHER REVIEWS 12
STATUS OF SIGNIFICANT RECOMMENDED ACTIONS
OUTSTANDING FROM PREVIOUS SEMIANNUAL REPORTS 31
SUMMARIES OF SELECTED CURRENT AUDITS AND SPECIAL
REVIEWS 41
(U) INSPECTIONS 45
SIGNIFICANT COMPLETED INSPECTIONS AND OTHER
REVIEWS 37
STATUS OF SIGNIFICANT RECOMMENDED ACTIONS
OUTSTANDING FROM PREVIOUS SEMIANNUAL REPORTS 50
SUMMARY OF SELECTED CURRENT INSPECTIONS ......................53
(U) INVESTIGATIONS 66
SIGNIFICANT COMPLETED INVESTIGATIONS AND OTHER
REVIEWS 67
STATUS OF SIGNIFICANT RECOMMENDED ACTIONS FROM
PREVIOUS SEMIANNUAL REPORTS 60
SUMMARIES OF SELECTED CURRENT INVESTIGATIONS 75
(U) ANNEX SECTION
STATISTICAL OVERVIEW
COMPLETED AUDITS AND REVIEWS
CURRENT AUDITS AND REVIEWS
COMPLETED INSPECTIONS AND REVIEWS
CURRENT INSPECTIONS
COMPLETED INVESTIGATIONS
CURRENT INVESTIGATIONS
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(V) A Message from the
Acting Inspector genera(
(U) The past six months were a time of
change, both for the Office of Inspector General
(OIG) and for the Agency as a whole. With the
retirement in January of Britt Snider, the DIG lost
its statutory Inspector General, and, as of this
writing, a successor has yet to be named.
Nonetheless, the work of the Office continued
apace, and the productivity and relevance of its
product remained high as we took on issues ? some contentious ? that
focused on mission and mission support. At the corporate level, changes in
management and the reorganization of the Agency's mission support
elements resulted in faster review of OIG reports and increased
responsiveness to our recommendations.
(U This reporting period saw the publication of several
reports tha a ressed Agency resource management and mission support ?
chief among them audit and inspection reports on the impact of the
establishment of the Agency's Central Services Working Capital Fund
(WCF). The audit was designed to evaluate whether the WCF had resulted
in cost savings to the Agency and, specifically, whether such savings had
been able to be applied toward mission activities. The audit concluded that
the WCF had been successful in achieving efficiencies in the delivery of
services by creating incentives for the businesses to increase productivity
and reduce costs. However, the audit was unable to determine that the WCF
had, in aggregate, resulted in cost savings for the Agency. The inspection,
which focused on the impact of the WCF on the Agency's mission, found
that, although WCF had increased cost consciousness among Agency
managers, there were significant impediments to its successful
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implementation. As a result of OIG's findings and recommendations as well
as independent evaluations by Agency management, the Executive Director
froze new entries into the WCF pending a thorough management review.
(U The Office had fewer unprogrammed requests than usual
during the repor mg period, which allowed us to make substantial progress
on our annual work plan. The Audit Staff focused its efforts on a wide range
of financial management and information technology issues, evaluations of
Agency programs and activities, and oversight of field stations. Audits of the
financial and managerial controls over In-Q-Tel and of the impact of the
Chief Information Officer (CIO) on Agency information services provided
timely input to deliberations about the future of those entities.
(U In addition to its work on the Working Capital Fund, the
Inspection ta completed two noteworthy inspections: the Agency's
Declassification and Release Program and An Overview of Foreign
Language in the Agency. During this reporting period, the Staff adopted a
new, more flexible inspection schedule that allows us to devote more time to
the inspection of complex issues or components. So far it is working
successfully, with less lag time between inspections.
The Investigations Staff completed several sensitive cases during
the repor ing period, and two major efforts ? an investigation of allegations
of unauthorized disclosure or release of satellite imagery to a foreign
government and an assessment of Agency compliance with Executive Order
12333 with regard to special collection techniques ? are nearing completion.
The Staff also began working with the Office of the Procurement Executive
to heighten contracting officers' awareness of the potential for contract
fraud.
(U) The recent Agency reorganization has had an impact on our
work. The changes in corporate management and the realignment of
mission support have been positive developments for this Office. We have
received strong support from the new Executive Director, who demonstrably
values the functions we perform and provides rapid review of our products.
Our recommendations are taken seriously and, more often than not, acted
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upon. Where there are disagreements, they are debated openly and without
prejudice, and any remaining issues are reflected in the final product. The
realignment of mission support has eliminated a bureaucratic layer,
streamlining the review process for our audits and inspections.
(U) Finally, because of the professionalism of our staff and the
support of the DCI and senior management, I am confident that our Office
will continue to make a significant contribution to the efficiency and
effectiveness of the Agency. I am hopeful, however, that a statutory IG who
has the backing of the President and the confidence of the Congressional
oversight committees will soon be here to lead the OIG in the important
work ahead.
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(U) STATUTORY REQUIREMENTS
(U This report is submitted pursuant to section 17 of
the CIA Act of 1949, as amended, which requires the Inspector
General to provide to the Director of Central Intelligence (DCI), not
later than 31 January and 31 July of each year, a semiannual report
summarizing the activities of the Office of Inspector General (OIG)
for the immediately preceding six-month periods, ending
31 December and 30 June, respectively.
(U) All audit activities of the OIG are carried out in accordance
with generally accepted government auditing standards. All OIG
inspection and investigation activities conform to standards
promulgated by the President's Council on Integrity and Efficiency.
(U) The OIG has had full and direct access to all Agency
information relevant to the performance of its duties.
(U) Subpoena Authority
(U
any subpoenas.
During this reporting period the IG did not issue
(U) Legislative Proposals
(U) In the semiannual report for the immediately preceding
reporting period, we presented the following legislative proposals.
As this Congress is still in session and action on the proposals has not
been completed, we repeat these proposals in this report.
(U) OIG Authority to Request Assistance
(U) In section 402(b) of the Intelligence Authorization Act for
Fiscal Year 2001, the Congress changed the words "Federal agency"
in section 17(e)(8) of the CIA Act of 1949 (50 U.S.C. ?403q(e)(8)) to
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"Government agency" in each of three places that "Federal agency"
appeared. OIG did not request these changes and the reason for
them is unclear.
(U/ The effect of the changed wording of the section
appears to now mean that the IG must seek the DCI's concurrence to
request information or assistance from all government entities, such
as state and local authorities. This requirement would unnecessarily
burden the DCI with routine OIG requests for various types of
assistance and information from non-federal entities. In addition, to
the extent that the change in language makes it unclear whether the
section now applies to federal agencies, it eliminates the section's
previous command that such agencies cooperate with the CIA IG
"insofar as is practicable."
(U) It is recommended that section 17(e)(8) of the CIA Act be
changed through the Intelligence Authorization Act to read as
originally enacted. Suggested legislative language is as follows:
Sec.TERMINOLOGY WITH RESPECT TO FEDERAL
AGENCIES - Section 17(e)(8) of the Central Intelligence Agency
Act of 1949 (50 U.S.C. 403q(e)(8)) is amended by striking
"Government" each place it appears and inserting "Federal."
(U) Period to Complete the Financial Statement Audit of the Central
Services Program
(U) Section 21(g)(1) of the CIA Act of 1949 (50 U.S.C.
?403u(g)(1)) provides that "Not later than 31 December each year, the
Inspector General of the Central Intelligence Agency shall conduct an
audit of the activities under the program during the preceding fiscal
year."
(U) We recommend that section 21(g)(1) be changed to provide
that the Inspector General complete such audits required under the
section no later than 31 January. This change would give the
Working Capital Fund Business Office and Finance's Accounting
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Operations more time to prepare fiscal year financial statements, and
provide OIG auditors with the necessary time to test the accuracy
and reliability of the financial information.
(U) Changing the date in section 21(g)(1) will also change the
date the audit report will be due to the Office of Management and
Budget, the DCI, and the two Congressional oversight committees, as
section 21(g)(3) requires the Inspector General to distribute the audit
report within 30 days of completion of the audit. This requested
change would bring the financial audit requirements of the CIA
Inspector General in line with similar requirements placed on other
Inspectors General in the Federal Government.
(U) It is recommended that section 21(g)(1) of the CIA Act be
amended through the Intelligence Authorization Act to reflect this
change. Suggested legislative language is as follows:
Sec. ADDITIONAL TIME FOR AUDITS - Section 21(g)(1) of
the Central Intelligence Agency Act of 1949 (50 U.S.C.
?403u(g)(1)) is amended by striking "December 31" and inserting
"January 31" and by striking the word "conduct" and inserting
the word "complete."
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(U) AUDITS
(U) The Audit Staff conducts performance, financial-related,
and financial statement audits of Agency programs and activities. In
addition, the Audit Staff provides oversight of Agency interests
through its participation in reviews sponsored by the Intelligence
Community Inspectors General Forum and responds to special
requests from Congressional and Executive Branch officials.
(U/ In the last six months, the Audit Staff has focused
its efforts on a wi e range of financial management and information
technology subjects, evaluations of Agency programs and activities,
and oversight of field stations. The Audit Staff completed its annual
financial statement audit of the Central Services Working Capital
Fund and issued unqualified opinions on three of the five fiscal year
2000 financial statements. In response to Congressional tasking, the
Audit Staff completed an audit of financial and managerial controls
over In-Q-Tel? the Agency venture to foster the use of emerging
technologies in the Intelligence Community. Overall, In-Q-Tel
management had designed and implemented effective financial and
managerial controls, but needed to focus more on internal controls
related to contracting, equipment management, and corporate
security. Likewise, the Agency needed to improve its security
posture with respect to In-Q-Tel and plan for the effective transfer of
technology from In-Q-Tel to the Agency.
On the operations side, the Audit Staff issued an audit
report on
an reviewe e mec anisms or oversig
of proprietary activities. In January 2001, the Audit Staff issued a
memorandum to the Deputy Director for Operations highlighting
common themes from recent audits of 19 field stations and bases.
The summary of field station oversight was well received and
prompted a worldwide communication to stations and bases alerting
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them of the audit findings and the need to improve resource
management in the field.
(U) The Audit Staff hosted the seventh annual Intelligence
Community Inspectors General Audit conference at CIA
Headquarters in May. The theme of the conference was information
technology, featuring speakers from CIA, the Department of Defense,
the Senate Select Committee on Intelligence, and private industry.
Over 200 OIG representatives from the Intelligence Community
attended the one-day conference.
(U) In May 2001, the Audit Staff realigned its organizational
structure in response to a need for better coverage of a growing
number of financial and information technology issues and the
Agency's recent shift to Mission Support Offices. Oversight of
information technology has been melded with Audit Staff coverage
of procurement, research and development, and logistics. Oversight
of the Agency's financial activity will focus on strengthening
financial management at Headquarters and in the field, assisting the
Agency as it prepares to produce auditable financial statements, and
conducting annual financial audits of the Central Services Working
Capital Fund. Other business lines that the Audit Staff will continue
to pursue include personnel, security, and programs and activities
related to intelligence collection and production.
(U) The Staff has been successful in recruiting a highly
qualified workforce at all grade levels. The recruiting program will
continue for the foreseeable future as the Staff continues to build
expertise in information technology and financial statement auditing.
Lastly, the Audit Staff has embarked on a pilot program to
evaluate the benefits of electronic working papers and a paperless
audit environment. Ongoing audits of and the
Agency's automated travel system are using the electronic working
papers application. At the completion of the pilot, the Audit Staff
will assess the merits of this technology and decide on a course of
action.
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(U) SIGNIFICANT COMPLETED AUDITS AND OTHER REVIEWS
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(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS OUTSTANDING
FROM PREVIOUS SEMIANNUAL REPORTS
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(U) SUMMARIES OF SELECTED CURRENT AUDITS AND SPECIAL REVIEWS
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(U) INSPECTIONS
The Inspection Staff is responsible for conducting
inspections o A gency programs and operations to evaluate their
efficiency and effectiveness and their compliance with law, Executive
Orders, and regulations.
(U The Inspection Staff has adopted a new, more
flexible approach to scheduling. During a seven-month cycle
(February-August), inspection teams will conduct either one major
inspection or several less extensive inspections; the second cycle
(September-January) will remain five months in length. The Staff
currently has nine ongoing inspections: Counterterrorist Center
(CTC)/DO; Budget Formulation and Execution; Information
Management Staff/DO; Near East Division/DO; Office of Russian
and European Analysis! DI; Scientific, Technical, and Weapons
Analysis; Office of Congressional Affairs; Leadership Analysis; and
iWeb/DI.
(U The Inspection Staff continues to conduct its tw
week course or new inspectors and its seminar for team leaders
before the start of each inspection cycle. In addition, in response to
the increasing sophistication of its methodology, the Staff has
instituted a series of functional seminars for all inspectors and
research assistants. These address topics such as interview
methodology; techniques for scoping an inspection; information
technology; research and analysis; and drafting.
(U) SIGNIFICANT COMPLETED INSPECTIONS AND OTHER REVIEWS
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(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS OUTSTANDING
FROM PREVIOUS SEMIANNUAL REPORTS
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(U) SUMMARY OF SELECTED CURRENT INSPECTIONS
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(U) INVESTIGATIONS
(U ) The Investigations Staff is responsible for
investigating possible violations of statutes, regulations, policies, and
procedures, as well as potential waste, mismanagement, abuse of
authority, and substantial dangers to public health and safety
connected with Agency programs and operations. The Investigations
Staff is also responsible for general oversight of the employee
grievance system and appeals of decisions of various Agency boards.
(U The Investigations Staff remains focused on the
timeliness of its products and continues to see a steady decrease in
the average age of cases. The average case age has decreased 36
percent since the Investigations Staff started tracking this statistic in
January 1999. This efficiency has enabled the Investigations Staff to
focus on proactive initiatives such as a current project that is
reviewing certain CIA activities which fall under the auspices of
Executive Order 12333. The Staff is also pursuing a proactive project
with the Office of the Procurement Executive to enhance fraud
awareness among contracting officers. Investigations Staff
representatives are providing awareness briefings to contracting
officers concerning common types of fraud indicators and
encouraging the officers to report suspicious situations. In addition,
the Investigations Staff organized an interactive fraud focus group
for contracting officers to gather and share fraud-related information
and also to help investigators gain more insight into the contracting
environment. A comprehensive list of fraud indicators has been
compiled for use in future briefings and to assist in focusing the use
of investigative resources.
Investigations Staff has led an office-wide effort to improve
secure communications with officers in the field and to facilitate
investigations, inspections, and audits. In connection with overseas
field interviews conducted by the Executive Order 12333 special
assessment team, OIG participated in a successful pilot program that
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(U/ Finally, the Investigations Staff will design a
continuous improvement plan in the months ahead that will include
employee perspectives regarding Staff policies, procedures, and
practices. This plan will respond directly to employee viewpoints as
reflected in a Management Advisory Group employee survey, as well
as ideas for improvement that were generated from Staff focus
groups. This endeavor will incorporate the guiding principles as
outlined in the Agency's Best Management Practices 2005 program.
(11) SIGNIFICANT COMPLETED INVESTIGATIONS AND OTHER REVIEWS
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(U) STATUS OF SIGNIFICANT RECOMMENDED ACTIONS FROM PREVIOUS
SEMIANNUAL REPORTS
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(U) SUMMARIES OF SELECTED CURRENT INVESTIGATIONS
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(U) Audit Staff
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STATISTICAL OVERVIEW
uring the period 1 January to 30 June 2001, the Audit Staff
issue reports, completed a survey of the oversight of proprietary
activities, and responded to a Congressional inquiry concerning the
collection of personal information from individuals accessing Agency
public internet sites. The Audit Staff made 51 recommendations to
improve accounting and financial management, supply and property
management, general management, and procurement management.
The Audit Staff had 27 audits ongoing at the end of the
reporting period. Nine of the audits involve Agency field stations.
The remaining efforts address topics such as the Agency's security
protective service, outsourcing of Agency processes and functions,
covert action activities conducted under the Presidential Finding of
9 July 1991, the Travel Reengineering, Integration, Automation, and
Development System, and the Agency's reporting of cash and other
monetary assets.
(U) Inspection Staff
(U) During the first six months of 2001, the Inspection Staff
completed four inspections. The Inspection Staff had nine
inspections ongoing at the end of the reporting period.
(U) Investigations Staff
(U/ The Investigations Staff completed work on 107
matters of various types during this reporting period. Of this
number, 15 cases were of sufficient significance to be the subject of a
final report-6 Reports of Investigation and 9 Disposition
Memoranda.
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(U/ Recoveries on behalf of the US Government
during this reporting period, as a result of the Investigations Staff's
efforts, totaled approximately $53,450.
(U/ As of 30 June 2001, 75 matters were in various
stages of review ? y the Investigations Staff.
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(U) COMPLETED AUDITS AND REVIEWS
1 January -30 June 2001
(U) Financial and Information Management
(U) Fiscal Year 2000 Financial Statements of the Central
Services Working Capital Fund
(U) Cost Impact of the Central Services Program on Agency
Operations
(U) Chief Information Officer's Impact on Agency Information
Services
(U) Agency Debt Collection Process
(U) General Administration
(U) Collection of Personally Identifiable Information From
Individuals Accessing Agency Public Internet Sites
(memorandum)
(U) Procurement and Property Management
(U) Financial and Managerial Controls Over In-Q-Tel, Inc.
(U) Vendor Payment Processes
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(U) Operational Functions and Activities
(U/
Survey of the Mechanisms for Oversight of
Proprietary Activities
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(U) CURRENT AUDITS AND REVIEWS
30 June 2001
(U) Financial Management
(U) Audit of Cash and Other Monetary Assets
(U) Fund Balance With Treasury
(U) Survey of Oversight of Field Station Financial
Administration
(U) Operations
Covert Action Activities Conducted Under the
Covert Action Activities Conducted Under the
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(U) Operations (continued)
(U) Personnel and Security
(U) Corporate Development Training Courses Provided by the
Office of Training and Education
(U) Administration of the Security Protective Service
(U) Administration of Personnel Overtime Compensation
(U) Survey of the Administrative Resources Center in the
DS&T
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(U) Procurement and Technology
(U) Outsourcing of Agency Processes and Functions
(U) Agency Contracting Practices Associated With
Independent Contractors
(U) Travel Reengineering, Integration, Automation, and
Development System (TRIAD)
(U) Audit of Internet Requirements and Implementation
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COMPLETED INSPECTIONS AND REVIEWS
1 January-30 June 2001
(U) Agency's Declassification and Release Program
(U) Agency's Student Programs
(U) Foreign Language in the Agency: An Overview
(U) Working Capital Fund: Impact on Mission
CURRENT INSPECTIONS
30 June 2001
(U) Counterterrorist Center/DO
(U) Budget Formulation and Execution
(U) Information Management Staff/DO
(U) Near East Division/DO
(U) Office of Russian and European Analysis/DI
(U) Scientific, Technical, and Weapons Analysis
(U) Office of Congressional Affairs
(U) Leadership Analysis
(U) iWeb/DI
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INVESTIGATIONS COMPLETED
1 January -30 June 2001
(U) Alleged Conflict of Interest
Alle ed Embezzlement
(U) Alleged Mismanagement of Cover Compromise
(U) Alleged Misuse of Authority
(U) Alleged Theft/Misuse of Government Property
(U) Alleged Violation of Unique CIA Post-Employment Restrictions
(U) False Travel Accountings
(U) Misrepresentation of CIA
(U) Misuse of Government Property - Telephone
(U) Regulatory Violations
* (U) These investigations resulted in a Disposition Memorandum rather than a Report of
Investigation.
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(U) Time and Attendance Abuse
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CURRENT INVESTIGATIONS
As of 30 June 2001
Category Number of cases
Grievances
Board Appeals 4
Management and Supervision 3
Other 2
General Investigations
Criminal and Prohibited Acts
Conflicts of Interest 9
False Claims/Statements/Vouchers 2
False Claims - Frequent Flyer Misuse 1
False Claims - Other 2
False Claims - Time & Attendance 9
Megaprojects 2
Misconduct - Employee 3
Misconduct - Management 3
Procurement Fraud 18
Promotion 1
Regulatory Violations 3
Theft and Misuse of Government Property 7
Unsubstantiated Allegations 2
Waste 1
Other - Administrative/Criminal 3
Total Ongoing Cases 75
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