Oversight of Small Agencies - Testimony of Michael Carroll, USAID Acting Inspector General, Before the Subcommittee on Financial and Contracting Oversight of the Senate Committee on Homeland Security and Governmental Affairs

Agency for International Development (USAID) Office of Inspector General (OIG) was established in 1980 to combat waste, fraud, and abuse and promote economy, efficiency, and effectiveness in USAID programs and activities. The OIG's oversight mandate has since grown to encompass the full portfolio of programs and activities at USAID, the U.S. African Development Foundation (USADF), Inter-American Foundation (IAF), and Millennium Challenge Corporation (MCC). The OIG assumed audit and investigative oversight of USADF and IAF in 1999 and was given oversight responsibilities relating to the MCC when it was established in 2004. The OIG's mission is to provide independent oversight that promotes efficiency and effectiveness and safeguards the integrity of programs and operations under its jurisdiction. The OIG identifies and prioritizes discretionary audit and investigative activities based on stakeholder interests and needs, alignment with strategic goals, program funding, and the risks associated with agency programs. The OIG applies this approach to oversight to all of the agencies for which it has oversight responsibilities. The OIG brings significant resources and capabilities to bear on the oversight responsibilities with which it has been entrusted. It has substantial depth of experience and a considerable personnel base with expertise in the full range of core oversight-related fields. The OIG's consolidated, multiagency approach to oversight has several advantages, including access to a greater depth of in-house expertise in different technical and functional areas, greater flexibility to address emerging risks across its oversight portfolio, and enhanced independence. The OIG's size also enhances its independence, allowing it to support and maintain discrete management, human capital, and IT resources and systems independent of the agencies it oversees. The OIG's engagement in multiple agency settings also lessens its vulnerability to potential pressure from any one agency seeking inappropriate influence on its work. The appointment process for the USAID Inspector General (IG) helps ensure that the IG will be fully vetted and enjoy an important measure of congressional support. The OIG has certain other institutional advantages in providing oversight of foreign assistance, including its extensive international reach and experience. Its footprint extends to nine country and regional offices around the world, giving it on-the-ground visibility into the progress of foreign assistance programs and activities. The OIG maintains its own cadre of Foreign Service personnel to staff its offices abroad and has built a track record of effectively engaging host country law enforcement personnel, prosecutors, and courts to bring those who commit fraud and other unlawful acts to justice. The OIG's consolidated oversight model also presents advantages, including its ability to provide oversight of cross-cutting initiatives like Power Africa that are implemented by more than one foreign assistance agency. The OIG anticipates having more opportunities for cross-cutting work to examine the effectiveness of multiagency efforts in the future. However, the OIG's consolidated oversight model also involves some challenges, including the need to balance oversight responsibilities across multiple portfolios of varying sizes. The OIG manages about $24 billion in budgetary resources in fiscal year (FY) 2013, while MCC managed budgetary resources amounting to $2.7 billion. The OIG invests proportionally more in oversight of small agencies when they are considered on a dollar-for-dollar basis. The OIG performs core financial statement and Federal Information Security Management Act oversight work for all the agencies it oversees and works to ensure that each agency receives a degree of oversight commensurate with associated program risks. The OIG plans and executes performance audits and reviews and conducts investigative outreach efforts in line with this assessment. For USADF and IAF, the OIG has performed less of this activity than for MCC, but remains engaged nevertheless. The OIG's oversight model under which it operates provides less assurance to taxpayers that risks are being appropriately addressed. Under this model, agencies enter into agreements with OIGs for oversight services. This is the case with OPIC, with regard to which the OIG has a limited oversight role. The OIG is not formally designated as OPIC's OIG and does not have explicit authority to conduct audits of OPIC programs and activities that it deems appropriate.