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Circular 95-12


DEPARTMENT OF HEALTH AND HUMAN SERVICES
Public Health Service
Indian Health Service
Rockville, Maryland 20857

Refer to: OAM/DMP

INDIAN HEALTH SERVICE CIRCULAR NO. 95-12

Effective Date:  05/30/1995

INDIAN HEALTH SERVICE STAFF INTERACTION WITH
THE OFFICE OF INSPECTOR GENERAL AND THE GENERAL ACCOUNTING OFFICE
RELATING TO AUDITS

  1. PURPOSE.  This circular prescribes policy and procedures for preparing timely and quality responses to audit reports issued by the Office of Inspector General (OIG), Office of Audit Services, and the General Accounting Office (GAO).  Guidance is also provided for responding to OIG requests for information.

  2. AUTHORITY.  This circular is established in accordance with the requirements of Public Law (P.L.) 95-452, "Inspector General Act of 1978," P.L. 100-504 "Guidelines for Implementation of the Reporting Requirements Under the Inspector General Act Amendments of 1988," P.L. 67-13, "Budget and Accounting Act of 1921," and the Office of Management and Budget (OMB) Circular A-50, "Audit Followup."  This circular conforms to audit resolution and followup policies and procedures established by the Department of Health and Human Services (HHS) and the Public Health Service (PHS).

  3. POLICY.  The procedures described herein apply to all IHS employees in their interaction with the OIG and the GAO.  Managers and supervisors at all levels in the IHS are accountable for their staff's compliance with these procedures.

  4. THE OIG.  The mission of the OIG is to promote the economy, efficiency, effectiveness, and integrity of HHS programs by eliminating fraud, waste, abuse, and mismanagement.  The OIG is comprised of the following three divisions:

    1. Office of Audit Services.  The Office of Audit Services (OAS) conducts, oversees, and provides policy direction for comprehensive financial and performance audits of HHS programs, operations, grantees, and contractors.  The primary objective of these audits include detecting and preventing fraud and abuse in HHS programs and operations; identifying systematic weaknesses that augment opportunities for fraud and abuse; and advising the Secretary of HHS and the Congress about problems and deficiencies identified in HHS programs and operations.  The OAS is the focal point for financial audit activity within the HHS and provides overall leadership and direction in carrying out the Department's responsibilities under the Chief Financial Officers Act (CFOA) relating to financial statement audits and the Federal Managers' Financial Integrity Act (FMFIA) on management controls.

    2. Office of Investigations.  The mission of the Office of Investigations (OI) is to protect the integrity of HHS programs and the well-being of legitimate HHS beneficiaries by investigating allegations of fraud and abuse by service providers and illegal benefit seekers.  Investigations by the OI can result in criminal prosecutions, administrative sanctions, and civil actions against wrongdoers, including monetary penalties and exclusion from HHS programs.

    3. Office of Evaluation and Inspections.  The Office of Evaluation and Inspections (OEI) conducts rapid evaluations (called inspections) of HHS administrative and program operations and procedures.  The inspections provide policy makers with timely and accurate information, and analysis and advice for use in improving: the efficiency and effectiveness of programs, the quality of service that programs provide their clients, and the laws and regulations that govern the programs.

  5. THE GAO.  The GAO was established in 1921 under the "Budget and Accounting Act of 1921," as an Agency independent of the executive departments.  Under the control and direction of the Comptroller General of the United States, the goal of the GAO is to meet the needs of the Congress by furnishing audit and evaluation services that are useful, objective, accurate, and available when needed.  The GAO investigates, at the seat of government or elsewhere, all matters relating to the receipt, disbursement, and application of public funds.  The GAO audits and reviews are conducted in response to requests from Congressional committees or individual members of Congress.

  6. RESPONSIBILITIES.

    1. Headquarters.

      1. Director, IHS.  The Director, IHS, is responsible for:  (a) designating a top management official in the IHS to oversee audit followup, including resolution and corrective action, (b) assuring that management officials throughout the Agency understand the value of the audit process and are responsive to audit recommendations, and (c) assuring that the Agency complies with the OIG/GAO recommendations to prevent waste, fraud, abuse, or mismanagement of government resources.

      2. The Special Assistant to the Director of Headquarters Operations.  The Special Assistant to the Directors of Headquarters Operations (DHO), Office of the Director, serves as the IHS point of contact for scheduling and coordinating entrance and exit conferences with the OIG/GAO.  The Special Assistant to the DHO ensures that the OIG/GAO staffs do not short-cut or circumvent their own established procedures for interacting with the IHS.

        In the absence of the Special Assistant to the DHO, The Chief, Management Control Branch (MCB), DMP, assumes the responsibility as agency point of contact.

      3. Associate Director, Office of Administration and Management.  The Associate Director, Office of Administration and Management (OAM), as the Agency's Executive Officer, is responsible for ensuring:  (a) that systems of audit followup resolution and planned corrective actions are documented and implemented, (b) that timely responses are made to all audit reports, (c) that disagreements between the OIG/GAO and the IHS are resolved, and (d) that all corrective actions are completed.

      4. Division of Management Policy.  The staff in the Division of Management Policy (DMP), OAM, is responsible for coordinating the IHS' comments on OIG/GAO audit reports and the necessary followup action; and assuring that the IHS responses are appropriate, fully responsive, and submitted in a timely manner.  The DMP staff distributes copies of the OIG/GAO audit reports to the Area and Associate Directors for review and comments.

      5. IHS Program/Function Managers.  The IHS program managers are responsible for reviewing and analyzing audit reports, providing completed and timely responses to the audit organizations (OIG/GAO) through the DMP, and taking corrective actions when appropriate.  The program managers are responsible for meeting the deadlines and format requirements for submitting comments and followup reports established by the DMP.  This compliance allows time for the necessary review, clearance, and signature by the Associate Director, OAM.

        When IHS program managers disagree with an audit recommendation or an IHS response, the matter shall be resolved with the Associate Director, OAM.

    2. Area Directors.  The IHS Area Directors are responsible for responding directly to the OIG/GAO when the review is in the informal reporting stage.  The informal reporting stage is when the audit organization has completed an audit of an IHS Area office program and has requested comments directly from the Area office prior to issuance of a consolidated report.  A copy of the responses to the audit agency by the Area Directors must be provided to the Chief, MCB, DMP.

      The Area Directors are responsible for submitting comments on the draft and final OIG/GAO reports and complying with the deadlines established by the Chief, MCB, DMP.

  7. OIG/GAO AUDIT REPORTING AND FOLLOWUP PROCESS.

    1. Entrance Conference.  Prior to an OIG/GAO audit, the audit agency should conduct an entrance conference with key IHS staff. During the entrance conference the purpose of the audit is explained.  The IHS is then given an opportunity to provide feedback on the practicality of the audit and the appropriateness of the review methodology.  The IHS may also suggest which IHS Areas or facilities should be reviewed.

    2. Reviews.  Audit agencies conduct reviews on-sight or by requesting information and documents to be mailed to a specific office.  The IHS employees who are contacted by the OIG/GAO auditors must provide the information requested to the extent it is available.

    3. Exit Conference.  After an audit is completed, and prior to issuance of a draft report, the OIG/GAO is supposed to conduct a closeout session or exit conference with the audited agency.  The purpose of the exit conference is for the auditors to explain the preliminary findings and to give the IHS an opportunity to respond to the preliminary findings.  This allows for a clearer and more accurate draft report.

    4. OIG/GAO Audit Reporting and Followup Process.  The audit agency issues draft and final reports for each audit conducted.  When a report is issued, a request for comments is received from the Chief, Cost and Audit Management Branch (CAMB), Public Health Service (PHS).  The requests are in the form of a note addressed to the Director, DMP, and to the Office of the Director, IHS.

      1. Draft Report.  The IHS is given an opportunity to comment on draft audit reports.  Comments by the IHS may correct information contained in the report, or will assist the audit agency in clarifying an audit finding.  The IHS must submit its comments to the CAMB within a specified time period.  The time periods may vary depending on the sensitivity of the audit findings or the urgency for the IHS to implement corrective actions.  Usually 30 to 45 calendar days is allowed for the PHS to submit a response to the audit agency.  Depending on the deadlines imposed on the PHS by the audit agency, the Chief, MCB, DMP establishes deadlines for the IHS comments on the draft report.  The IHS' comments on draft reports must include corrective actions that describe how the IHS will implement the OIG/GAO recommendations.

      2. Final Report.  A final report is usually issued by the audit agency within 90 calendar days after receipt of the IHS comments on a draft report.

        The PHS is then allowed up to 60 calendar days to submit comments on the final report.  Depending on the deadlines imposed on the PHS by the audit agency, the Chief, MCB, DMP establishes deadlines for the IHS comments on the final report.  The IHS comments must include information on the status of corrective actions to implement the OIG/GAO recommendations.  The IHS program managers must make every effort to bring the reports to closure within one year after issuance of the final report.

        The Associate Director, OAM, in his/her capacity as the Agency Management Control Officer, determines if the OIG/GAO audit report would constitute an "alternative management control review" under the FMFIA.  This determination could impact the management control review (MCR) cycle of a function listed in the IHS management control plan.  During future MCRs, compliance will be measured for adherence to the OIG/GAO recommendations to which the IHS has agreed.

      3. Audit followup Status Reports.  After the IHS has submitted comments on the fina1 report, and recommendations remain open after six months, the report may go into audit followup.  The IHS is required to report quarterly on the status of corrective actions until each of the recommendations have been implemented.

        Requests for the audit followup reports are received from PHS in the same manner as requests for the draft and final reports.  The CAMB, PHS, usually requires these reports to be submitted by the IHS within 30 calendar days after the end of each quarter.  The DMP staff notifies the IHS program managers of impending due dates prior to the end of each quarter that a audit followup report is due.  This notification advises that the reports are due in the DMP within 10 working days after the end of each quarter.

  8. OIG REQUESTS FOR INFORMATION.  The IHS employees who are contacted by OIG auditors must provide the information requested to the extent it is available. The information provided must be complete, accurate, and cleared by a Division Director, Associate Director, or Area Director. A copy of the completed form entitled, "Notification of Documents Requested by the OIG" (see Exhibit D), must be provided to the Executive Secretariat, IHS, Headquarters.

  9. EFFECTIVE DATE.  This circular is effective upon the date of signature by the Director, IHS.

/Michael H. Trujillo, M.D./
Michael H. Trujillo, M.D., M.P.H.
Assistant Surgeon General
Director, Indian Health Service


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