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TREASURY DIRECTIVE 40-01

DATE:  September 16, 2011
 
SUBJECT:    Responsibilities of and to the Inspector General
 
 
1.    PURPOSE.  This Directive summarizes the authority of the Treasury Inspector General (IG), the scope of the IG’s audit, investigative and oversight jurisdiction, and the reporting and other responsibilities of Department of the Treasury officials and employees to the Office of Inspector General (OIG).  It identifies those Treasury bureaus, offices, and programs which are subject to the authority of the Department’s other inspectors general, the Treasury Inspector General for Tax Administration (TIGTA) and the Special Inspector General for the Troubled Assets Relief Program (SIGTARP).
 
2.    SCOPE.  This Directive applies to all bureaus, offices, organizations and programs in the Department of the Treasury, with certain exceptions.  Programs, operations, events and matters arising in or concerning the Internal Revenue Service (IRS), the IRS Office of Chief Counsel, or the IRS Oversight Board, are within the sole audit, investigative, and other oversight jurisdiction of the TIGTA.  Similarly, events and matters relating to the Troubled Assets Relief Program (TARP) are within the sole audit, investigative and other oversight jurisdiction of the SIGTARP.
 
3.    POLICY.  It is the policy of the Department of the Treasury to fully support the OIG in its oversight work, to fully assist and cooperate with its inquiries, and to require its officers, employees, contractors, grantees and all other responsible persons to fully assist and cooperate with its inquiries.  This policy is enforced by Treasury Employee Rule of Conduct 31 Code of Federal Regulations (CFR) 0.207, Cooperation with official inquiries, which requires that “Employees shall respond to questions truthfully and under oath when required, whether orally or in writing, and must provide documents and other materials concerning matters of official interest when directed to do so by competent Treasury authority.”
 
4.    RESPONSIBILITIES.  This section sets out the authorities and responsibilities of the OIG, as well as the responsibilities of Treasury employees, contractors, grantees, and other affected persons and entities to provide information and assistance to the OIG.
 
The Inspector General is the head of the OIG, a statutorily established office of the Department of the Treasury (hereafter Treasury).  The OIG was established by the Inspector General Act Amendments of 1988 (Pub. L. 100-504).  Treasury Order (TO) 114-01 recognizes that establishment and contains Secretarial delegations of authority to the IG.  The IG's duties pursuant to the Program Fraud Civil Remedies Act are found in 31 CFR Part 16.  The OIG is independent of the Department, and of all other offices within Treasury.  The IG reports to the Secretary through the Deputy Secretary.  The organization and functions of the OIG are set forth in Treasury Directive (TD) 27-12.
 
      a.    The Inspector General is authorized to:
 
            1)    conduct, supervise and coordinate timely and appropriate audits and investigations relating to the programs and operations of the Treasury including all of its bureaus and offices, with the exceptions set forth above regarding the work of TIGTA and SIGTARP.
 
                  a)    Pursuant to Section 8D(c) of the Inspector General Act of 1978, as amended (hereinafter the Act), this includes conducting internal investigations within the Alcohol and Tobacco Tax and Trade Bureau (TTB).
 
                  b)    For the purpose of OIG audits and investigations, all constituent elements of the Legal Division of the Treasury shall be considered part of that Division and not part of any other bureau.
 
            2)    provide leadership and coordinate and recommend policies for Treasury activities designed to:
 
                  a)    promote economy, efficiency and effectiveness in the administration of; and
 
                  b)    prevent and detect fraud, waste and abuse in Treasury programs and operations;
 
            3)    inform the Secretary, Deputy Secretary, and the Congress fully and currently about any problems and deficiencies relating to the administration of any Treasury program or operation and the need for, and progress of, corrective action;
 
            4)    review and comment on existing and proposed legislation and regulations relating to Treasury programs, operations, and personnel;
 
            5)    report expeditiously to the Attorney General whenever the IG has reasonable grounds to believe there has been a violation of Federal criminal law except as otherwise provided by Section 8D(g) of the Act;
 
            6)    delegate any or all authority under TO 114-01 and/or this Directive to another OIG employee, as the IG determines is appropriate;
 
            7)    access returns and return information as defined in Section 6103(b) of the Internal Revenue Code of 1986 in accordance with the provisions of Section 6103 of such Code and the Act, maintain internal controls over such information that meet the requirements of 26 U.S.C. 6103(p)(4), and exercise appropriate controls over any and all classified, sensitive, or otherwise restricted information that is obtained pursuant to the IG's official duties and is in the IG's custody and control;
 
            8)    establish guidelines for determining when it is appropriate to use non-Federal auditors to audit Treasury activities; and
 
            9)    receive and investigate complaints or information from employees, contractors and other individuals concerning the possible existence of criminal or other misconduct constituting a violation of law, rules, or regulations, a cause for suspension or debarment, or mismanagement, gross waste of funds, abuse of authority, or a substantial and specific danger to the public health and safety.
 
            10)   Subject only to the specific exceptions set out below, as a general rule all Department of the Treasury officials, officers and employees (hereafter Treasury employees) are required to report promptly to the OIG any information or allegation coming to their attention that indicates that any Treasury employee, former employee, contractor, subcontractor, or potential contractor, may have engaged in improper or illegal activity, including but not limited to:
 
                  a)    a criminal or other illegal act;
 
                  b)    a violation of the Standards of Conduct or other Federal regulation;
 
                  c)    a prohibited personnel practice or violation of merit systems principles; and
 
                  d)    any act which creates a specific danger to the public health and safety.
 
            11)   Matters raising questions of legality or propriety under E.O. 12333, as amended, regarding the conduct of United States intelligence activities, and proscribing certain intrusive intelligence gathering methods, shall be reported either to the OIG or to the Office of General Counsel.
 
            12)   All Treasury employees must provide to the IG and to that official's duly authorized representatives full, free and unrestricted access to Treasury activities, property, data, correspondence, records, information technology systems, and any other information that the IG determines is necessary to an audit, investigation, or other official inquiry.  In the case of classified documents, OIG employees accessing information shall comply with applicable security rules and regulations.  If such records, etc., include material protected by 26 U.S.C. § 6103, the OIG shall comply with the requirements and restrictions of such section regarding access to such information, and its proper use, dissemination, storage and safeguarding.
 
            13)   All Treasury employees shall cooperate fully with duly authorized representatives of the OIG by disclosing complete and accurate information pertaining to matters being investigated, audited or reviewed by the OIG.  If the employee is the subject of an investigation, the employee will be afforded all required rights.
 
            14)   When the Secretary has provided the IG with written notification pursuant to Section 8D(a) of the Act, prohibiting the IG from carrying out or completing any audit or investigation or issuing any subpoena, to prevent the disclosure of sensitive information, a Treasury employee shall withhold that information from the IG.
 
            15)   Treasury employees who receive and review OIG audit reports or Reports of Investigation in the course of their official duties shall consult with the OIG prior to releasing or copying any report or portion thereof for the use of any other person, except for those persons with an official need to know.
 
            16)   Treasury employees shall maintain in confidence all communications with an authorized representative of the IG when requested to do so, unless required or permitted by law to disclose.  Treasury employees shall not discuss any pending OIG investigation with the subject/subjects of the investigation or their representatives without approval of the OIG.
 
            17)   Any employee who has authority to take, direct others to take, recommend, or approve any personnel action shall not take or threaten to take any action against any employee as a reprisal for making a complaint or disclosing information to the OIG, unless the complaint was made or the information disclosed with the knowledge that it was false or with willful disregard for its truth or falsity.
 
            18)   Treasury employees and others may report suspected fraudulent or wasteful practices in Treasury programs and operations using a toll-free nationwide Treasury OIG Hotline number, 1-800-359-3898.  The OIG will not disclose the identity of any employee without the employee's consent, unless the IG determines that such disclosure is unavoidable.  The OIG will also make every effort to protect the identity of individuals who are not Treasury employees.
 
      b.    Heads of Bureaus and Offices shall:
 
            1)    ensure that, upon request, OIG auditors and investigators are provided with adequate and appropriate office space, equipment, and other services, pursuant to Section 6(c) of the IG Act;
 
            2)    ensure that timely and appropriate responses to OIG audit reports and Reports of Investigation are prepared for and received by the OIG; and
      
            3)    assure the widest possible dissemination within their bureaus of the parts of this Directive that pertain to employee responsibilities to the OIG.  To that end, they may issue further instructions as necessary to implement this Directive.  All such instructions must be submitted to and approved by the IG prior to issuance.
 
            4)    The OIG directly conducts, supervises and coordinates all investigations and inquiries of suspected violations of Title 18, United States Code, and other investigations of suspected criminal or other misconduct relating to the programs and operations of the Department of the Treasury within the OIG’s jurisdiction.
 
            5)    When an OIG employee receives an allegation, it should be turned over to the Office of Investigations for analysis.  The Office of Investigations shall determine whether the allegation or information shall be:
 
                  a)    assigned to an OIG agent for investigation or other disposition;
 
                  b)    referred to another Treasury office for administrative action; or
 
                  c)    referred to another agency such as the Department of Justice (DOJ) or the Office of Special Counsel (OSC).
 
            6)    It is the policy of the OIG to notify appropriate Treasury and bureau officials of OIG investigations that are being conducted within their areas of responsibility.
 
            7)    At the conclusion of an OIG investigation, the OIG will issue a Report of Investigation. In cases involving criminal conduct, the report will be issued to the appropriate U.S. Attorney or to the DOJ. When approved by the U.S. Attorney or DOJ, the OIG will advise the appropriate bureau head with respect to the outcome of the IG's investigation.  In cases where there is no evidence of criminal misconduct, or when the U.S. Attorney or DOJ declines the case, the report will usually be issued to the appropriate action official, but no lower than the bureau head, for appropriate action.
 
            8)    The action official in receipt of the OIG Report of Investigation must then report to the OIG on the action taken.
 
            9)    When the IG notifies an office or bureau head that the OIG is conducting an investigation of a particular matter within the IG's jurisdiction, no other investigation or similar activity will be initiated or continued regarding that matter by any Treasury office or bureau without the express approval of the IG.
 
            10)   Generally, the OIG shall conduct any internal investigation or inquiry concerning alleged criminal or other misconduct.  However, other Treasury employees may conduct inquiries in the following circumstances.
 
                  a)    When provided for by other law, e.g., an Equal Employment Opportunity investigation, or an investigation ordered by the Secretary for transmission to the OSC.
 
                  b)    A minor administrative or management matter.
 
            11)   The IG or the Assistant Inspector General for Investigations (AIGI) shall refer any evidence received of a potential criminal violation directly to the Attorney General or to the appropriate U.S. Attorney.
 
            12)   The OIG shall adequately safeguard all Reports of Investigations. At all times and when not in use, reports shall be stored in locked repositories in accordance with 31 CFR Part 2.  Circulation and discussion of the contents of Reports shall be limited to employees with an official need to know.
 
            13)   Treasury Offices and Bureaus shall refer to the OIG for action and response any inquiries from employees, bureau officials, other Government agencies, the press, and others, including Freedom of Information Act or Privacy Act requests, consistent with 31 CFR Part 1, concerning any investigative activity that has been or is being conducted by the IG.
 
            14)   When the IG refers an allegation that falls within the IG's jurisdiction concerning flagrant or notorious conduct to the action official of a bureau or office for management action, the allegation should be investigated by an appropriate management action official.  If the action official believes that a formal investigation should be conducted by trained criminal investigators, then the matter shall be resolved by consultation between the bureau’s action official and the AIGI.
 
            15)   The IG may investigate any request received from the OSC that the Secretary refers to the IG.
 
                  a)    The IG shall prepare for the review and signature of the Deputy Secretary all final Reports of Investigation requested by the OSC.  The reports shall be submitted by the IG through the Deputy Secretary to the OSC, and shall conform to the requirements set forth in 5 U.S.C. 1213(d).
 
                  b)    OSC requests for information, as opposed to requests for written reports or requests for investigation, directed to a bureau or office shall be handled directly by the bureau or office receiving the request.  A copy of the response to the OSC shall be forwarded to the IG at the same time that it is provided to the OSC.
 
                  c)    Upon completion of an OIG investigation, the IG or the AIGI shall refer any finding of a criminal violation directly to the Attorney General or the appropriate U.S. Attorney.  The IG shall advise the bureau head with respect to the conclusion of any such investigation only with the approval of the Attorney General or appropriate U.S. attorney.
 
                  d)    Upon completion of an OIG investigation, if no criminal misconduct is found, or if criminal misconduct is found but the U.S. Attorney declines to prosecute, the IG or AIGI may submit the Report of Investigation to the bureau head for appropriate action.  In the case of investigations of senior officials or notorious conduct, the IG may, at the IG's discretion, submit the report to the Secretary or Deputy Secretary for appropriate action.  OIG investigative reports may be referred to management prior to a prosecutorial decision only with the concurrence of the prosecutor.
 
                  e)    Within 90 calendar days of receipt of a Report of Investigation from the OIG, the action official or that official's supervisor shall submit to the IG, along with the Report of Investigation (all copies) submitted by the IG, a written response detailing the action taken or planned to correct violations and addressing each finding in the Report of Investigation.
 
                  f)    The IG shall review action officials' responses to IG Reports to determine whether corrective actions taken are generally appropriate to the findings of those Reports.  If the IG determines that any particular action is inappropriate, the IG may consult with the office or bureau head to provide any critical comments, state future expectations, and hold bureau officials responsible for future disciplinary action.
 
                  g)    Action officials and other officials with access to IG Reports of Investigation shall limit access and discussion of the contents to those employees with an official need to know.  They shall ensure that IG reports are at all times safeguarded and, when not in use, stored in a locked repository, in accordance with 31 CFR Part 2.
 
                  h)    If the IG determines that an investigation is appropriate for referral to the General Counsel or designee, pursuant to the Program Fraud Civil Remedies Act, the IG may submit the Report of Investigation to the General Counsel or designee pursuant to 31 CFR Part 16.4.
 
            16)   The OIG provides or supervises all audit services to the programs and operations of the Treasury within its jurisdiction.
 
                  a)    The OIG formulates Department-wide audit policies and priorities and ensures that all audits performed within the Department, whether performed by Treasury or outside auditors, are in accordance with standards established by the Comptroller General of the United States for audits of Federal entities.
 
                  b)    The IG distributes final audit reports to all headquarters and field officials responsible for taking corrective action on matters covered by the reports, and to Secretarial officers, bureau heads, and other officials who have an official interest in the subject matter of the report.
 
                  c)    The IG audits and reports on the effectiveness of audit recommendation monitoring systems and conformity with Office of Management and Budget (OMB) Circular A50, Revised, "Audit Followup," and TD 40-03.  The IG submits these audit reports to the Assistant Secretary for Management and appropriate bureau heads and Secretarial officers.
 
                  d)    The action official will reply to the IG in writing within 30 calendar days of the date of the draft report, unless otherwise provided in the report transmittal. The reply will describe actions taken and planned, target dates for any incomplete corrective action, and reasons for any disagreement with the draft report.
 
                  e)    The reply will be incorporated as appropriate into the final audit report which will then be distributed to the action official and others who may have an official interest in the subject of the report. If the reply is not received within 30 calendar days and an extension has not been granted, the report may be issued without the reply.  Extensions should be requested in writing and should be from the action official to the OIG official who signed the report.
 
                  f)    Reports on pre-award audits of contract proposals will be issued in final without written responses.  Any audit recommendations arising from pre-award audits that relate to procedural issues shall be included in a separate management letter report. When the contract is negotiated, the action official shall prepare and submit a written response to the OIG.
 
                  g)    Within 30 days after issuance of a final audit report containing recommendations and/or findings that have not been agreed to, the action official shall submit a written reply to the Deputy Secretary. This reply shall explain the reasons for the lack of agreement with the recommendations and/or findings contained in the audit report.  The action official shall simultaneously submit a copy of the reply to the IG.
 
                  h)    Resolution shall be made within a maximum of 6 months after issuance of a final audit report in accordance with OMB Circular A-50 and TD 40-03.f.  The OIG will periodically follow up on report recommendations to ensure that corrective actions have been completed and are effective.
 
            17)   The IG shall recommend policies for and shall assist management and the Designated Agency Ethics Officer in accordance with 5 CFR 2638.203 to establish and administer a comprehensive integrity program for the Treasury and to maintain standards of honesty and integrity among all Treasury employees and programs.
             
            18)   The IG shall prepare a semiannual report to the Secretary, pursuant to Section 5(a) of the Inspector General Act of 1978, as amended, summarizing Inspector General audit and investigative activities within the Treasury.
 
            19)   The IG shall review existing and proposed legislation and regulations that could impact on the economy and efficiency of programs and operations within the Treasury.  All such proposed legislation and regulations originating in the Treasury or any bureaus shall be provided to the IG by responsible Departmental officials in enough time to enable the OIG to comment.  In addition, all Treasury officials shall consider timely OIG comments, if any, prior to approving in final or promulgating any legislative proposal or regulation.
 
5.    AUTHORITIES.
 
      a.    Public Law (Pub. L.) 100-504, “The Inspector General Act Amendments of 1988.”
 
      b.    TO 114-01, “Office of Inspector General.”
 
      c.    Executive Order (E.O.) 12333, “United States Intelligence Activities,” dated December 4, 1981, as amended.
 
      d.    TD 40-03, “Treasury Audit Resolution, Follow-Up, and Closure,” dated February 2, 2001.
 
6.    REFERENCE.    
 
      a.    TD 27-12, “Organization and Functions of the Office of Inspector General.”
 
7.    CANCELLATION.  Treasury Directive (TD) 40-01, “Responsibilities of and to the Inspector General,” dated September 21, 1992, is superseded.
 
8.    OFFICE OF PRIMARY INTEREST.  Office of Inspector General.
 
 
 
                                    /S/
                                    Eric M. Thorson
                                    Inspector General
 

 
 
Last Updated: 9/29/2011 10:48 AM

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