James R. Ebbitt
Assistant Inspector General for Audit
Office of Inspector General, USDA
Washington, D.C.
Addressing the National Association of Home Builders:
I’d like to talk about the role of the Inspector General and what we’ve been doing for a number of years in this particular area. Agriculture has had an Inspector General dating back to 1962. Orville Freeman was the Secretary of Agriculture at that time; he, as a result of the Billie Sol Estes scandals back in those days, brought together all of the auditors and investigators that worked for USDA. Essentially, back in those days, there were approximately 40 or so Agencies within the Department, each of those Agencies had auditors or investigators working under that stovepipe scenario. And none of them communicated with each other very well. So you had Billie Sol Estes and probably others out there at the same time that were stealing, if you will, from this Agency, so these auditors were aware of it, but the next group at another Agency weren’t aware of it. As a result, you had a lot of bad stuff going on and nobody knew about it. So Mr. Freeman had the foresight to bring us all together and created the IG at that time back in 1962. A lot of years passed; we were going along pretty well. And then Secretary Butz, in the 1970’s, didn’t necessarily agree with all the things that the auditors were working on and as a result, he disbanded the Inspector General’s office. In 1974, at the stroke of a pen, we were no more. And we had an Office of Audit and an Office of Investigation. And, the investigators continued to report directly to the Secretary of Agriculture; the auditors, the ones you really didn’t like, although we were there to help, of course, reported to the Assistant Secretary for Administration. We continued like that until 1978 when, under President Carter, Congress passed the Inspector General Act of 1978. President Carter signed that Bill into law. We had, at that point in time, a legislative mandate to make audits and investigations in the Department.
Essentially, what the 1978 Bill did was to create an Inspector General who reports, first, directly to Congress and, second, to the Secretary — but not necessarily in that order: he reports across the board both to the Congress and to the Secretary of Agriculture. He’s appointed by the President, and confirmed by the Senate.
The current Inspector General is Roger Viadero. He’s been with us about a year and a half now. He has an interesting background. He started his career as a policeman in New York City — he worked homicide. And he has said that, in comparison, the Inspector General’s job is easy. As a policeman, day in and day out he had dead bodies to deal with, and in the IG business, we don’t deal in dead bodies (thank God): We have programs that we’re working on every day. Programs you can fix, and this is easy in comparison to homicide. He spent about 10 years there. He then spent about 25 years with the FBI. He comes to us from the FBI. He’s also a CPA. So he brings that policeman/FBI background and his CPA hat. In fact, he tells the story that he really has two weapons, since the investigators in IG at Agriculture are authorized to carry firearms to make arrests and so on. Roger says he has two weapons in his pocket: one is the 9 millimeter and one is the 5 millimeter; and the 5 millimeter — the pencil — is the more dangerous of the two. [No one laughs]. A CPA joke, I guess.
At any rate, Congress set us up like that and by setting us up in that method, it gives us the independence that the IG needs to have in having Congress as his boss as well. In other words, we do not work solely for the Secretary of Agriculture; we are asked to report on programs, issues and findings directly to the Congress. We do that day in and day out in a formal process through semi-annual reports. And we do that through an informal process, too: The IG’s up on the Hill a lot — stops in and talks to various Congressmen having to deal with Agriculture issues and so on.
A speaker from OMB talked about oversight of this particular program, the 515 program. Obviously, as you well know, it’s getting a lot of oversight. There’s a lot of people interested on the Hill and a lot of suggestions for change in how these programs operate. That’s our role — our role is to make suggestions, make recommendations within the Department and to the Congress for change for the better.
I want to show you how the Department is organized — the IG reports directly to the Secretary, as does the Under Secretary for Rural Development. We are not in the chain to the Rural Housing Service. We work independently of those folks. However, we make our audit recommendations to the Administrator of the Rural Housing Service, to the Under Secretary for Rural Development, and ultimately to the Secretary. Sometimes there’s some confusion over that particular issue of our reporting responsibility. We do not report to the Rural Housing Service.
Now, by law, there are some things we’re supposed to do, and some things we’re not supposed to do. The former, as I mentioned, include conducting audits and investigations, oversight of auditors and investigators and others that may be working in the Department. This comes into play in the 515 program where there are private-sector CPA firms that are working out there; we will select a sample of some of those audits that they’re working on to review, to make sure they’re conducted in accordance with standards and the rules and regulations put out by the Rural Housing Service.
We make recommendations, report violations of law to the Department of Justice; we work with Justice as we need to. And, we keep the Secretary and Congress informed.
Now, this isn’t in the law, but it’s clear there are some things that it’s clear we’re not supposed to do; this is sometimes where it gets confusing. People, will, a lot of times, argue that we do these things: we are not supposed to manage programs, that’s not our job; and we’re not supposed to establish policy. On that particular one, that’s a fine line on how you might interpret that. Ultimately, we don’t establish policy — we make recommendations to the Secretary, to the Administrators, to the Hill as necessary for program change and accomplishments. To that end, it’s our job to sell that product, if you will. We have to sell that; and to sell that, you do audits and you gather evidence and you gather information to support your recommendations. But, in the final analysis, that’s what they are —recommendations. And, in the final analysis, if the Secretary or the authorizing Committees review our material and say thank you very much, we’ve decided to go in this direction, obviously that’s their choice — they are either the legislators or the mangers of the programs, and that’s what they’re required to do. That’s not our job.
But a lot of the time, people will confuse that. They’ll say, what do you mean, you don’t make policy. Look at your audit reports — you’ve got all kinds of things in there that say you shalt do this and you really out to do it this way and so on. We think you should; that’s why we wrote it in that fashion. Ultimately, that’s someone else’s decision to make, and, all we ask is that we get a good hearing on the process and that if they choose not to go in the direction that we’ve hoped they might, that they would offer back either a basis for not accepting that recommendation or a better idea as to how they want to carry out the program.
We have about 350 auditors working in the IG’s office at Agriculture, and around 225 investigators. Out of those auditors, we are spending (although it varies year to year) about 10 to 15% of our time on audits in this particular area. Agriculture, as you well know, has many other things going on including the Forest Service and the Food Stamp program. Actually the Food Stamp program gets an awful lot of our attention because of the massive amounts of money in that particular program and a lot of the problems associated with that program. But, roughly 10 to 15% of our time in this particular area, and that’s been holding relatively true for the last four or five years. A lot of that is in the 515 program, although we have done some work in recent years in the Single Family program and other programs that the Rural Housing Service operates.
We try to work closely with the Administrator and RHS staff. We have very recently issued an audit which is intended to support the Rural Housing Service as they go forward with some of the suggestions they’re making in this current cycle on reauthorizing some of these program activities. We have worked very closely with that staff; we have sat down with them on all of our suggestions and recommendations. And, at the present time, they tell us they agree with us with the exception of one particular area, and that’s on Identity of Interest companies.
We want to just quickly walk through the areas that we’re talking about in the report. As I understand it the Senate is going to hold a hearing probably sometime in June looking at an oversight on some of these issues. It is our intention that the Inspector General will go up and talk about some of these issues at that hearing and our suggestions and recommendations for change in some of these areas.