Office of Inspector General $8,060,000

The Appropriations Act that funds the National Science Foundation provides for a separate Appropriation heading for NSF's Office of Inspector General (OIG). Accordingly, the FY 2003 request identifies the resources needed to support OIG, including amounts for personnel compensation and benefits, contract services, training, travel, supplies, materials, and equipment.

The FY 2003 request for OIG is $8.06 million, which represents an increase of $1.02 million over the FY 2002 amount of $7.04 million.

(Millions of Dollars)

Total may not add due to rounding
¹Includes Pension and Health Costs as proposed by the Administration's Cost Integration Legislation requiring agencies to pay their full share of accrued cost of retirement beginning in FY 2003.

In February 1989, the National Science Board established OIG pursuant to the Inspector General Act Amendments of 1988. The statute confers on OIG the responsibility and authority to:

• Conduct and supervise audits of NSF programs and operations, including organizations that receive NSF funding.

• Conduct investigations concerning NSF programs and operations, including organizations that receive NSF funding.

• Evaluate allegations of misconduct in science and engineering, such as fabrication, falsification, or plagiarism, involving scientists who request or receive NSF funding.

• Provide leadership, coordination, and policy recommendations for:

  • Promoting economy, efficiency, and effectiveness in the administration of NSF programs and operations, and
  • Preventing and detecting fraud and abuse in NSF programs and operations.
    
    

• Issue semiannual reports to the National Science Board and Congress to keep them informed about problems, recommended corrective actions, and progress being made in improving the management and conduct of NSF programs.

As set forth in the OIG Strategic Plan, the primary functions of the Office are audits, reviews, and investigations. Reflecting the diverse skills, training, and experience necessary to oversee NSF's varied programs, OIG staff includes scientists, attorneys, certified public accountants, investigators, evaluators, and information technology specialists. The focus of an investigation, audit, or other review may be on a single entity or individual, an organization, a project involving multiple disciplines, or a broad program or functional area.

OIG audits grants, contracts, and cooperative agreements funded by the Foundation's programs. OIG performs audits and reviews of the operations of both internal agency programs and external organizations that receive NSF funding to ensure that financial, administrative, and programmatic activities are conducted economically and efficiently. The Office is also responsible for auditing the Foundation's annual financial statements, which are required for all NSF accounts and activities by the Government Management Reform Act of 1994. OIG contracts with a public accounting firm to conduct the financial statements audit, and the cost is allocated proportionately to the accounts audited. In addition to overseeing the audit, OIG performs systemic audits of financial, budgetary, and data processing systems used by NSF to develop the financial statements. The Office also performs multi-disciplinary reviews of financial, management, and program operations that identify broader problems and highlight best practices.

OIG investigates possible wrongdoing by organizations and individuals who submit proposals to, receive awards from, conduct business with, or work for the Foundation. Allegations of misconduct in science and engineering, such as falsification, fabrication, and plagiarism, are also investigated. OIG assesses the validity and seriousness of such allegations and recommends proportionate action. When appropriate, the results of these investigations are referred to the Department of Justice or other authorities for criminal prosecution or civil litigation. Less serious cases may be referred to the Foundation for administrative resolution. OIG also conducts outreach activities aimed at raising the awareness of funded researchers, institutional administrators, and agency employees about the OIG's role and NSF's rules and expectations.

In response to recommendations from the Senate Committee on Governmental Affairs, the National Science Board approved measured growth, over a period of years, in the number of audits conducted at organizations that receive NSF funding. The increase requested for FY 2003 is needed to improve OIG coverage of NSF programs that have not been adequately addressed in the past due to resource constraints. The additional resources will also allow OIG to expand its effort in FY 2002 to recruit auditors, investigators, and analysts with the experience and skills necessary to conduct broader evaluations of the effectiveness of NSF programs and assess the agency's progress in meeting the requirements of the Government Performance and Results Act. Over 75 percent of the request is allocated to OIG personnel costs, and the balance will permit continuing contract support for audits and modest growth in OIG technological capability, staff training, and outreach activities.

Personnel Compensation and Benefits and General Operating Expenses

(Thousands of Dollars)

Total may not add due to rounding
¹Includes Pension and Health Costs as proposed by the Administration's Cost Integration Legislation requiring agencies to pay their full share of accrued cost of retirement beginning in FY 2003.

The proposed increase would allow OIG to expand its efforts in several priority areas, consistent with the OIG's Strategic Plan. To support NSF program goals, our audit objectives focus on seven areas that pose the most management risk to the agency. To have an impact in each of these, additional resources are needed to build our staff and increase our skills and experience in conducting performance audits and evaluations of NSF's business operations. The two additional auditors/evaluators that would be funded at this level would enable OIG to assess more effectively (1) NSF's management of large projects, such as the operations component of the U.S. Polar Programs Activity, and infrastructure projects funded from the Major Research Equipment and Facilities Construction appropriation, (2) the validity and verifiability of performance measures used by NSF to report its accomplishments under the Government Performance and Results Act, (3) the agency's administration of the grant awards process, and (4) NSF's planning and management of its human capital. OIG would be able to focus greater attention on overseeing improvements identified for the merit review system, including increasing the diversity of panelists and expanding the universe of grant recipients.

By FY 2003, current NSF initiatives in science, mathematics, and technology education will also be sufficiently seasoned for productive OIG review. The additional staff is also needed to oversee audits by outside CPA firms, on which OIG increasingly relies for reviewing NSF awardee compliance with the financial terms of award agreements. In particular, closer monitoring is required for awards to certain types of institutions and for certain kinds of costs that pose a higher risk of financial noncompliance. To meet the priority audits requested by NSF and the needs identified by OIG's assessment of NSF program risks, we are also requesting a modest increase in funding for audits conducted by outside CPAs.

Current investigation staffing levels allow us to react to allegations of fraudulent practices, but they do not provide adequate resources for proactive prevention and detection. With an additional investigative FTE, we would be able to focus more proactively on audit findings that indicate possible fraud and on other activities with potential violations that currently go undetected. We would be able to initiate additional cases resulting from grant fraud and compliance review programs, reactivate SBIR fraud reviews on a selective basis, and more effectively concentrate our resources on major, complex cases to ensure their timely resolution. Finally, additional audit and investigative staff would also enable us to take advantage of missed outreach and education opportunities to awardee institutions, other government agencies, and IG offices. These contacts are useful both for making the various audiences aware of NSF OIG's services and concerns and for obtaining feedback and other information that helps us identify issues and prioritize our audits, investigations, and other analyses.