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and especially House Information Resources (HIR), took this report to heart, and made remarkable progress over the next few months. In our second Y2K report, Year 2000 Testing And Contingency Planning Efforts Should Minimize Risk Of Date Related Failures, we reported on the successful outcome of HIR's efforts. Finally, our third Y2K report, Summary Of The House Year 2000 Efforts, reported that Member and Committee offices, and all three House officers had taken reasonable actions to prepare for Y2K.

Furthermore, the House made significant progress in improving its financial management and operations in CY 1999. For the year ended December 31, 1998, the House compiled its own consolidating financial statements for the second consecutive year. Our financial audit validated that since last year's financial report the House implemented or initiated corrective actions to address a total of 45 prior audit recommendations. These positive efforts greatly reduced the House's eight weaknesses (three of which were material) to five--with no reportable material weaknesses--in this year's report. Thus, based on the extra effort of the staffs of both the CAO and OIG, we were able to express an “unqualified opinion” on the House's financial statements for the first time. The Audit Of The Financial Statements For The Year Ended December 31, 1998, Report No. 99-HOC-07, was issued on September 24, 1999. In addition, the Report of Independent Accountants on Compliance with Laws and Regulations, included in this audit report, identified no instances of noncompliance.

In addition to these audit efforts, we performed a detailed analysis of the Members' payroll process and assisted with the acquisition, selection and implementation of the new Members Payroll System. Furthermore, we assisted with the development of the Request for Proposal for the new Staff Payroll System and are currently working with the Human Resource/Payroll Evaluation Committee to select the new system. Our auditors also worked closely with the Superintendent House Office Buildings to ensure the timely and effective implementation of our audit recommendations related to our fire audit--Fire Protection Systems Do Not Adequately Protect The House issued December 18, 1998. As part of this effort, we attended bi-weekly meetings where the implementation and status of the House's fire protection plan was discussed. During 1999, we also worked with the House Officers to revise the Personnel Policies and Procedures for the Officers and Inspector General of the U.S. House of Representatives and, as part of the House Drug-Free Workplace, developed an OIG Drug-free Workplace Plan.

For your information and future reference, I have attached a list of all final audit reports issued by the OIG to date.

Calendar Year 2000 Planned Audits

Our audit planning process is changing in CY 2000 in order to improve our ability to provide adequate oversight of the House's administrative and financial operations. We are currently developing an audit universe of auditable areas in the House where we will be able, through risk ranking of these areas, to more effectively use our resources to meet the needs of the House. Our proposed 2000 AAP and Perpetual Inventory of Proposed Audits (PIPA) presents a three year strategic plan accounting for 48 audits--requiring 9,850 audit staff days of effort.

Further, starting in CY 2000 our use of contractors will be on a joint partnership effort where OIG and contractors will be working side by side to reduce the cost of contractors and to transfer the knowledge used on the audits to the staff. This approach, used on a trial basis in 1999, proved to be very successful, efficient, and cost effective.

For CY 2000, as provided in our proposed 2000 AAP, audits will continue to place particular emphasis on ensuring that House and joint entities have sound internal controls to promote efficiency and effectiveness, reduce risks of asset loss, and help ensure the reliability and integrity of these operations, and compliance with laws and regulations. Our primary objective in all of our audits is to work with management to improve the economy, efficiency, and effectiveness of operations, while ensuring a system of sound internal controls. Specifically, our proposed 2000 AAP provides for the initiation of 18 audits--8 financial and performance audits and 10 information systems audits. These audits are to be accomplished through the use of both my in-house audit staff and contractor audit staff working as a team. We estimate the total level of audit effort to accomplish these 18 audits to be approximately 4,550 staff days-2,625 OIG staff days and 1,925 contractor staff days.

FY 2001 Budget Request

The OIG's FY 2001 budget request contains the resource requirements necessary to maintain the same level of audit effort as anticipated in FY 2000. Specifically, this request calls for total funding of $4.04 million--an overall increase of $114,000 over our FY 2000 appropriation.

Relative to personnel compensation, I am requesting $1.995 million in FY 2001--an increase of $114,000 over the FY 2000 level. This increase represents mandatory increases associated with on-board staff for: (i) annualized FY 2000 cost of living adjustment,

(ii) anticipated FY 2001 cost of living adjustment, (iii) anticipated FY 2001 longevity and career ladder promotions, and (iv) anticipated FY 2001 merit increases.

In addition, I am requesting $2.045 million for non-personnel items in FY 2001. This request represents no change from our FY 2000 level.

Mr. Chairman, I wish to thank you and the Members of the Subcommittee for this opportunity to present my FY 2001 budget. At this time, I would be happy to answer any questions that you or the other Members may have.


December 21, 1999





AUDIT REPORTS (1995-1996-1997-1998-1999)

Member Computer Systems Security Weaknesses (Report No. 95-CAO-01,
May 3, 1995)

Proposed New Financial Management System Will Not Meet The House's Needs And
Should Be Terminated (Report No. 95-CAO-02, May 12, 1995)


Internet Security Weaknesses (Report No. 95-CAO-03, July 18, 1995)


Changes in Operating Practices Could Save Publications & Distribution $5.5 Million
Annually (Report No. 95-CAO-04, July 18, 1995)


The House Gift Shop's Internal Controls Need To Be Improved (Report No. 95-CAO-05,
July 18, 1995)


Changes in Operating Practices Could Save Media Services $1.7 Million Annually
(Report No. 95-CAO-06, July 18, 1995)

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Changes In Operating Practices Could Save Office Supply Store And Gift Shop
$1.3 Million Annually (Report No. 95-CAO-07, July 18, 1995)





Continuation Of Member Services Operations Threatened By High Operating Costs And
Numerous Internal Control Deficiencies (Report No. 95-CAO-08, July 18, 1995)

Storage Space Occupied By Old, Outdated Items Costs The House $170,000 Annually (Report No. 95-CAO-09, July 18, 1995)

Lack of Sound Personnel Policies And Procedures Could Cost The House Millions (Report No. 95-CCS-10, July 18, 1995)

Standardized Processes Are Needed To Create An Efficient And Effective Procurement
System (Report No. 95-CAO-11, July 18, 1995)



The House Needs To Integrate Planning And Financial Management To Improve
Productivity, Performance, And Accountability (Report No. 95-CCS-12, July 18, 1995)

Opportunities Exist To Improve The Generation Of Legislative Information In
The Office Of The Clerk (Report No. 95-CLK-13, July 18, 1995)


Opportunities Exist To Improve Resource Utilization In The Office Of
The Sergeant at Arms (Report No. 95-SAA-14, July 18, 1995)


Changes in Operating Practices Could Save Office Furnishings $1 Million Annually (Report No. 95-CAO-15, July 18, 1995)









Problems Plagued The House's Financial Operations (Report No. 95-CAO-16, July 18, 1995)

Split Responsibility For Equipment Leasing And Maintenance Cost The House
Almost $2 Million Annually In Payments For Outdated Equipment
(Report No. 95-CAO-17, July 18, 1995)

House Computer Systems Were Vulnerable To Unauthorized Access, Modification,
And Destruction (Report No. 95-CAO-18, July 18, 1995)

The Management And Control Of The House's Information Systems Operations Should
Be Improved To Better Meet Members' Needs (Report No. 95-CAO-19, July 18, 1995)

The House Needs to Follow A Structured Approach For Managing And Controlling
System Development Life Cycle Activities Of Its Computer Systems(Report No. 95-
CAO-20, July 18, 1995)

The House Beauty Shop's Management Controls Do Not Adequately Safeguard Assets
Or Ensure Compliance With The Law (Report No. 95-CAO-21, July 18, 1995)

U. S. House of Representatives Audit Of Financial Statements For The 15-Month Period
Ended December 31, 1994 (Report No. 95-HOC-22, July 18, 1995)

U.S. House of Representatives Audit Of Administrative Operations Compilation Report (Report No. 95-HOC-23, July 18, 1995)

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Results In Brief Extract From Performance Audits Of House Operations Compilation
Report (Report No. 95- HOC-24, July 18, 1995)

Findings And Recommendations Extract From Performance And Financial Statements
Audits Compilation Report (Report No. 95-HOC-25, July 18, 1995)

26) Improved Controls Could Prevent Abuse Of The House Restaurant System Unemployment Compensation Program (Report No. 95-CAO-26, August 11, 1995)

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Audit Survey Of The Joint Entities Of The Architect Of The Capitol
(Report No. 95-AOC-27, December 29, 1995)

Followup On Outstanding Issues From The Comprehensive House Audit
(Report No. 96-HOC-01, January 2, 1996)

House Experiencing Problems With The Implementation Of The Core Federal
Financial System (Report No. 96-CAO-02, March 1, 1996)

Poor Planning, Questionable Contracting, And Numerous Internal Control
Deficiencies Undermine Integrity And Usefulness Of House Identification System
(Report No. 96-SAA-03, March 5, 1996)

The House Is Ready To Implement The Core Federal Financial System (Report
No. 96-CAO-04, June 3, 1996)



Audit of Financial Statements For The Year Ended December 31, 1995 (Report
No. 96-HOC-05, July 30, 1996)




Additional Vendor Guidelines Are Needed To Ensure Integrity Of HIR's Operating
System (Report No. 96-CAO-06, July 31, 1996)

House Information Resources Policies And Procedures Related To Electronic Mail Need
To Be Improved (Report No. 96-CAO-07, September 3, 1996)

Internal Controls Over House Furnishings Need Improvement (Report No. 96-CAO-08,
September 10, 1996)

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