Semiannual Report to Congress
October 1, 2000 through March 31, 2001

• Inspector General Letter

• Agency Profile

• Office of Inspector General

• Audit Program

• Investigations Program

• Legislation, Regulations, and Policy

• Liaison Activities

• Information Required by the Act

• Audit Reports by Subject Matter

• Reports with Questioned Costs

• Reports with Recommendations that Funds be put to Better Use

INSPECTOR GENERAL

NATIONAL LABOR RELATIONS BOARD

WASHINGTON, DC 20570

I hereby submit this Semiannual Report: October 1, 2000 - March 31, 2001, which summarizes the major activities and accomplishments of the Office of Inspector General (OIG) of the National Labor Relations Board (Agency). The submission of this report is in accordance with the Inspector General Act of 1978, as amended (IG Act). Section 5 of the IG Act requires that the Chairman transmit this report to the appropriate committees or subcommittees of the Congress within 30 days of its receipt.

OIG issued 2 audit reports and 4 memoranda or letter reports. In the investigations program, OIG processed 222 contacts, initiated 8 cases, and closed 12 cases. The investigations resulted in 1 personnel action this period, and 1 referral for prosecution. We reviewed 3 public laws, 1 bill and 1 regulation. Details on these accomplishments can be found in the body of this report.

As stated in the last Semiannual Report, our Web page went on-line as part of the Agency's official Web site on September 28, 2000. Shortly after going on-line with our Web page, we noted a substantial increase in the number of contacts with our office. During this reporting period we processed 222 contacts as compared to approximately 50 contacts in prior periods. Although most of the contacts were of a routine nature and referred to Agency offices or other locations for action, seven contacts resulted in new investigative cases. We believe our Web page is proving to be a valuable method of communicating with the public.

The workload of our office was also impacted by legislation that was enacted late in the last session of Congress. The new laws established three reporting requirements for Federal inspectors general. Our office sent two of the three reports to Congress, and we are currently conducting a review to complete the third report.

I appreciate the support of all Agency employees in achieving the accomplishments set forth in this report, particularly the cooperation of the prior General Counsel who left the Agency in late April 2001.

Jane E. Altenhofen
April 30, 2001

AGENCY PROFILE

The National Labor Relations Board (NLRB or Agency) is an independent federal agency established in 1935 to administer the National Labor Relations Act (NLRA). The NLRA is the principal labor relations law of the United States, and its provisions generally apply to private sector enterprises engaged in, or to activities affecting, interstate commerce. NLRB jurisdiction includes the U.S. Postal Service (other government entities, railroads, and airlines are not within NLRB's jurisdiction.)

The NLRB seeks to serve the public interest by reducing interruptions in commerce caused by industrial strife. It does this by providing orderly processes for protecting and implementing the respective rights of employees, employers, and unions in their relations with one another. The NLRB has two principal functions: (1) to determine and implement, through secret ballot elections, the free democratic choice by employees as to whether they wish to be represented by a union in dealing with their employers and, if so, by which union; and (2) to prevent and remedy unlawful acts, called unfair fair labor practices, by either employers or unions or both.

NLRB authority is divided by law and delegation. The five-member Board primarily acts as a quasi-judicial body in deciding cases on formal records. The General Counsel investigates and prosecutes unfair labor practices before administrative law judges, whose decisions may be appealed to the Board; and, on behalf of the Board, conducts secret ballot elections to determine whether employees wish to be represented by a labor organization.

The Board consists of the Chairman and four members who are appointed by the President with the advice and consent of the Senate. Board Members serve staggered terms of five years each. The General Counsel is also appointed by the President with the advice and consent of the Senate and serves a four-year term. Sarah M. Fox completed her second recess appointment this period. She had served under a recess appointment from February 6, 1996, to November 13, 1997; was confirmed for a full term, which expired December 16, 1999; and received another recess appointment the next day, which expired on December 15, 2000.

Dennis P. Walsh received a recess appointment on December 29, 2000, to serve as a Board Member and is currently filling this position.

Leonard R. Page was designated as Acting General Counsel on December 19, 2000. Mr. Page had been serving as NLRB General Counsel since November 29, 1999, under a recess appointment, which expired on December 15, 2000.

NLRB received an appropriation of $216,438,000 for Fiscal Year (FY) 2001, to fund 2,002 full-time equivalents. NLRB Headquarters is at 1099 14th Street, NW, Washington, DC.

In addition to the Headquarters building, employees are located in 51 field offices throughout the country. Three satellite offices for the Administrative Law Judges are located in Atlanta, San Francisco, and New York. As of October 2, 2000, field offices included 32 Regional Offices, 16 Resident Offices, and 3 Subregional Offices.

Additional information about NLRB can be found on the Web site www.NLRB.gov.

OFFICE OF INSPECTOR GENERAL

The NLRB established the Office of Inspector General (OIG) pursuant to the 1988 amendments to the Inspector General Act of 1978 (IG Act).

Resources

The FY 2001 OIG budget was $804,500 for operations, of which $67,000 was for contract services. In addition to the Inspector General, the OIG consists of a Counsel/Assistant Inspector General for Investigations, Assistant Inspector General for Audits, Special Agent, two Auditors, and a Staff Assistant.

Trevor Gray, a law student at George Mason University School of Law, who had been serving in the capacity of a Student Assistant in the OIG, left the Agency on October 20, 2000.

Jennifer S. Kovachich, Special Counsel to the General Counsel, began a detail to the OIG on January 8, 2001.

AUDIT PROGRAM

The Inspector General is to provide policy direction for and is to conduct, supervise, and coordinate audits relating to program operations of the Agency. We issued two audit reports and four memoranda or letter reports.

Reports Issued

• We issued Audit Report OIG-F-8-01-01, Audit of NLRB's Fiscal Year 1999 Accounting and Reporting Systems, on December 12, 2000. This review was conducted to evaluate the Agency's capability to prepare audited financial statements.
  
  The Agency currently records most financial transactions that are needed to prepare the principal statements, and the data recorded is reasonably accurate. We identified five areas where transactions would have to be recorded or corrected. These were workers' compensation, imputed financing costs, a capitalized lease, amortization of computer software, and depreciation.
  
  We found no instances of noncompliance with laws and regulations that would have to be reported in an audit of the financial statements. We found that the
  
  Agency's financial management systems substantially complied with the U.S. Government Standard General Ledger at the transaction level. The financial management system did not substantially comply with the Federal financial management systems requirements or Federal accounting standards.
  
  We considered one matter, information security, involving the internal control and its operation to be a material weakness. We obtained an under-standing of the significant internal controls related to performance measures but did not provide an opinion.
  
  Management took actions to record or correct transactions and improve information security. A decision was made that audited financial statements need not be prepared at this time, but the matter could be revisited at a later date.
  
  
• We issued Audit Report OIG-AMR-31-01-01, Audit of Procurement of Court Reporting Services, on March 12, 2001. This review was conducted to assess whether (1) the Agency contracted for court reporting services in conformance with the Federal Acquisition Regulations and other applicable guidance and (2) controls were in place to ensure that contractors provided services acceptable to the user and in accordance with specifications.
  
  For the three Regions selected, we found the files contained required documentation to demonstrate financial and business responsibility. We also found contractors inaccurately billed the Agency for court reporting services, the Agency made both overpayments and underpayments, and transcripts delivered and accepted were not prepared in conformance with specifications.
  
  The Agency was overbilled $2,030 by contractors for nine hearings, mostly related contractors not making appropriate price adjustments for late transcript delivery. The accuracy of charges for seven hearings in one Region totaling $3,004 could not be verified because reports were not date stamped. The Agency overpaid four invoices for a total of $1,037 and underpaid seven invoices for a total of $734.89. We were unable to verify that payments made on two cancellations totaling $200 were appropriate because office records did not include cancellation reports.
  
  We found transcript format deficiencies concerning the certification of transcripts by court reporters, preparation and indexing of exhibits, indexing of witness testimony, and page margins and text placement in transcripts.
  
  The Divisions of Operations-Management and Administration agreed with the findings and recommendations. They developed procedures for the Field Offices, including a checklist for reviewing transcripts and invoices for payments. Training and oversight has already begun and training will be provided to regional personnel.
  
  
• We issued a memorandum on NLRB's Compliance with the Federal Managers' Financial Integrity Act of 1982 on December 22, 2000. While evaluating the relevant documentation for the Agency's current Federal Managers' Financial Integrity Act (FMFIA) review, we discovered that the language requiring the OIG to conduct an annual review was eliminated. We considered our annual FMFIA evaluation to be an unnecessary process and, therefore, will not issue a report on the FY 2000 FMFIA process or conduct evaluations in the future.
  
  Based on the limited work performed, we believe that the Agency is obtaining minimal benefit from the FMFIA process. This conclusion is based on our observations that the questionnaires are bureaucratic in nature and that managers do not report deficiencies except those identified by OIG.
  
  We suggested that the Agency consider ways to further simplify the FMFIA process, including the elimination of the questionnaire currently being used. Other considerations would be to use plain language or reduce the length of the questionnaire to one page.
  
  
• Pursuant to section 43-1552 of the D.C. Code, we submitted a report to Congress on January 10, 2001, on the promptness of the Agency's payments for water and sewer services received from the District of Columbia. We reported that the Agency's Headquarters and Washington Resident Office occupy spaces leased from a private landlord and that landlord was up-to-date for water and sewer services payment for the reporting period.
  
  
• Pursuant to section 646 of H.R. 5658 (P.L. 106-554), we submitted a report to Congress on January 29, 2001, regarding the personally identifiable information that the Agency collects from individuals who access its Internet Web site. We reported that the Agency's Web site privacy statement clearly states that the following information is collected when a person visits the site: (1) the Internet domain and Internet Protocol address of the user; (2) the type of browser and operating system used by the visitor; (3) the pages the visitor views; (4) the date and time the visitor accesses the Web site; and (5) if the visitor linked to the NLRB Web site from another site, that site's address.
  
  We found that this was the only information the Agency automatically collects from a Web site visitor and that the Web site was not using "cookies" -- technology that can track the activities of users over time or across different Web sites. We also found that this information is not used to generate any aggregate lists that contain personally identifiable information, nor has the Agency entered into any agreements with third parties, including other Government agencies, to collect, review, or obtain aggregate lists or singular data containing personally identifiable information relating to any individual's access or viewing habits for governmental or non-governmental Internet Web sites.
  
  
• We responded to a request from the Chairman of the Committee on Governmental Affairs on March 20, 2001, regarding the FY 1999 Performance Reports for the Results Act. The implementation of the Results Act has been a very dynamic process at the Agency, and a collaborative process between the Office of Inspector General, the Board, and General Counsel. In FY 2000, the Agency incorporated significant improvements into the strategic planning process that included decreasing the number of performance measures and adopting quantifiable performance measures.
  
  Additional work was needed throughout the entire process relating to verification and validation, such as assigning responsibility to mangers and defining terms. These efforts were hampered by the resignation of a key person. The absence of a key person knowledgeable of the detailed requirements of the Results Act and implementing guidance contributed to some of the findings in our inspection report that the Agency was not timely and did not include certain required data.
  
  
• Audit Follow-up
  
  Agreed upon actions were not completed within one year on three audit reports, one of which was previously reported:
  
  Review of the Case Activity Tracking System, OIG-AMR-28, was issued on September 15, 1999, and included in the prior semiannual report as having open recommendations for more than one year. The report was closed on December 15, 2000.
  
  Evaluation of Time and Attendance Practices, OIG-AMR-29-00-01, was issued on February 29, 2000, and had three open recommendations for more than one year. The report was closed on March 28, 2001.
  
  Review of Board Casehandling Timeliness, OIG-AMR-26-00-02, was issued on March 31, 2000. Two agreed upon actions remain to be implemented: 1) To revise Board policy to include current time standards for processing and to cancel unused policies designed to promote timeliness, and 2) Implement recommendations made by the Streamlining Committee. Management reportedly is negotiating implementation details for these two recommendations with the National Labor Relations Board Professional Association.
  
  Actions were completed within one year on one audit. Audit of NLRB's Fiscal Year 1999 Accounting and Reporting Systems, OIG-F-8-01-01, was issued on December 12, 2000. The report was closed on March 28, 2001

Ongoing Reviews

As of March 31, 2001, the ongoing reviews were of the Alternative Workplace Program, Property Controls Over ADP Items, Data Accuracy in NLRB Annual Reports, Debt Collection, CATS Information Security, and Bar Status of Agency Employees.

INVESTIGATIONS PROGRAM

The Inspector General is to provide policy direction for and is to conduct, supervise, and coordinate investigations relating to the programs and operations of the Agency. OIG processed 222 contacts, initiated 8 cases, and closed 12 cases. The investigations resulted in 1 personnel action and 1 referral for prosecution.

• Transit Subsidy Fraud. OIG received an anonymous tip alleging that a Headquarters employee was improperly receiving the Agency's transportation subsidy for work-to-home transportation. The investigation disclosed that for a 4-month period of time, the employee received the monthly transportation, in the form of a $22.00 Metro farecard, while using her personal vehicle as her sole means of transportation to and from work. After being interviewed by the OIG, the employee voluntarily surrendered two unused Metro farecards - a value of $44.00 - that she improperly received. The employee received a 10-day suspension without pay for this misconduct. (OIG-I-268)
  
  
• Theft of Excess Government Computers. OIG received information alleging that several Headquarters employees stole excess computer equipment. The excess computer equipment had been earmarked for distribution to educational programs. The investigation disclosed that the Agency's Property Management Section did not properly document the distribution of the excess computer equipment and could not account for 127 pieces of excess computer equipment. The theft and poor management controls occurred prior to the appointment of the current Chief, Procurement and Facilities Branch. Since her appointment, the Branch Chief has instituted tighter procedural controls. This case is currently under prosecutorial review by the Department of Justice and disciplinary review by the Agency. (OIG-I-269)
  
  
• Improper Advancement of Sick Leave. OIG received an allegation that a regional employee was improperly advanced sick leave. A subsequent investigation supported the allegation. The Agency determined that disciplinary action was not warranted. The Regional Director will follow Agency policy in the future. (OIG-I-280)
  
  
• Improper Use of a Government Vehicle. As previously reported, OIG received an allegation that a regional employee used a Government vehicle for non-official work-to-home transportation. The investigation substantiated that the employee used the Government vehicle for non-official work-to-home transportation after completing official travel. OIG issued a report of investigation suggesting that the Agency take appropriate administrative action in accordance with the statutory minimum penalty of a 1-month suspension for the misuse of a Government vehicle. The Agency did not agree that the employee knowingly used the Government vehicle for non-official work-to-home transportation, and, therefore, did not impose the 1-month suspension. (OIG-I-271)
  
  
• Misuse of Agency Computers. We discovered that an OIG employee was using a Government computer to access sexually explicit Internet Web sites. After being confronted with the results of our investigation, the OIG employee submitted a resignation. (OIG-I-281)
  
  
• Improper Hiring and Transit Subsidy Fraud. OIG received an anonymous tip alleging misconduct at the Agency Headquarters. The allegations include the improper hiring of the subject, transit subsidy fraud, time and attendance fraud, and improper travel. After conducting surveillance and interviews, the investigation did not disclose evidence that supported the allegations. (OIG-I-278)

Hotline

Employees and members of the public with information on fraud, waste and abuse are encouraged to contact OIG. A log of calls to a nationwide toll free number or the office numbers and a log of mail and facsimile messages are maintained. All information received, regardless of the method used, is referred to as HOTLINE contacts.

The information received over the hotline is the basis for the initial review for potential investigations. The information is analyzed to determine if further inquiry is warranted. Most HOTLINE contacts are calls from members of the public seeking help on an employment related problem or issues outside OIG and/or Agency jurisdiction. As appropriate, OIG refers these callers to: the NLRB office; local, state, or federal agency; or private resource to provide assistance.

During this reporting period, OIG received 222 hotline contacts, of which 93 were telephone calls and 129 were in writing. Seven contacts resulted in OIG investigative cases.

LEGISLATION, REGULATIONS, AND POLICY

The Inspector General is to review existing and proposed legislation and regulations relating to programs and operations of the Agency and is to make recommendations concerning the impact of such legislation or regulations. Similarly, we review Agency and OIG policy. We reviewed three public laws, one bill, one Department of Justice proposed regulation, two General Accounting Office publications, and an OIG policy.

Legislation

We reviewed the following legislation:

Section 401 of H.R. 5666 (P.L. 106-544) which amended section 43-1552 of the D.C. Code requiring a quarterly report to Congress by inspectors general regarding the promptness of their agency's payments for water and sewer services received from the District of Columbia. A summary of our report can be found on page six.

Section 646 of H.R. 5658 (P.L. 106-544) which required inspectors general to submit a report to Congress regarding personally identifiable information collected by their agency's Web site. A summary of our report can be found on page six.

Subchapter III of H.R. 4205 (P.L. 106-398) which requires inspectors general to submit a report to Congress regarding the security of their agency's computer systems. We are conducting a review to meet this reporting requirement.

H.R. 751, the Religious Communications Sanctity Act of 2001. This legislation would make it a crime for a law enforcement officer to surreptitiously listen to or record a communication that is privileged because of its religious character.

Proposed Regulation

We reviewed and commented on the Department of Justice's proposed regulation title "Confidentiality in Federal Alternative Dispute Resolution Programs." We suggested that the explanation to the Regulations clearly state that a party cannot claim confidentiality for information that is subject to mandatory disclosure under Federal law. We also suggested that the explanation to the Regulations state that parties cannot enter into agreements to prevent the disclosure of violations of Federal law or fraud, waste, or abuse.

GAO Guidance

We reviewed and commented on the exposure draft "Financial Audit Manual (Volume I)" published by the General Accounting Office (GAO). We found that the addition of sampling flow charts and examples of workpapers improved the manual and recommended that they be included in the final draft.

We also reviewed and commented on GAO's exposure draft "Maintaining Effective Control Over Employee Time and Attendance Reporting." We suggested that the GAO include guidance regarding the misconception that employees may use a morning or afternoon break to arrive late, leave early, or extend the time that they take for lunch. We also suggested that GAO resolve the ambiguity about the category of employees who may self-approve time and attendance data.

Agency Policy

The Counsel to the Inspector General is a member of the Agency's Rules Revision Committee which develops changes to Agency procedural regulations. During this reporting period, we continued our efforts to revise the Agency's Regulations pertaining to changes mandated by the Freedom of Information Act (FOIA) and to clarify how FOIA requests to the Inspector General for OIG documents are processed. The proposed Regulations were forwarded to the Office of Management and Budget for publication in the Federal Register.

OIG Policy

In April 2000, the National Archives and Records Administration (NARA) recommended modifications to the proposed records schedule which authorizes the disposal of OIG files.

We completed our work with the Agency's records officer to provide a draft OIG Records Disposition Authority to NARA. Notice of the draft disposition authority was reviewed by NARA and published in the Federal Register on March 30, 2001.

LIAISON ACTIVITIES

The Inspector General is to recommend policies for, and is to conduct, supervise, or coordinate relationships between the Agency and other Federal agencies, State and local governmental agencies, and nongovernmental entities. The Inspector General is to give particular regard to the activities of the Comptroller General of the United States, as head of GAO. Similarly, we encourage OIG staff members to participate in Agency programs and activities. OIG staff members are active in the inspector general community and agency activities.

Inspector General Community

The Inspector General is a member of the Executive Council on Integrity and Efficiency (ECIE), which consists primarily of the inspectors general at the Federal entities designated in the 1988 amendments to the IG Act. She participated in activities sponsored by the President's Council on Integrity and Efficiency (PCIE), which consists primarily of the Presidentially-appointed inspectors general.

The Inspector General is a member of an ECIE ad hoc committee addressing auditor independence, a PCIE/ECIE committee addressing one of the goals in the Strategic Plan, and the committee drafting the PCIE/ECIE FY 2000 Annual Report. She and the Assistant Inspector General for Audits are currently conducting a peer review of the Federal Communications Commission OIG.

The Counsel participated in the Council of Counsels to Inspectors General.

The Assistant Inspector General for Audits participated in the Office of Inspectors General Statistical Sampling Work Group, the PCIE IT Roundtable, and the Information Data Extraction and Analysis (IDEA) Users Group.

Agency Activities

The Counsel is a member of the Government Paperwork Elimination Act (GPEA) Committee. This committee was formed to ensure that the Agency meets the GPEA's October 2003 statutory deadline of providing a means for electronic transactions with the public as a substitute for paper. To date, the committee identified the transactions that may be accomplished electronically and established a timeline for meeting the October 2003 deadline. The Counsel is also a member of the Rules Revision Committee which develops changes to Agency procedural regulations.

An OIG Auditor is the NLRB Recreation and Welfare Association Treasurer. In addition to serving as the financial administrator, he helped coordinate activities for the Service Center.

Agency Newsletter

During this reporting period, we were provided space in the Agency's monthly newsletter. The newsletter is distributed to employees in each office and is available on the Agency's Intranet site. Each month we submit, for Editorial Board review, a short article advising employees on the requirements of Federal laws and regulations. It is our hope that this will assist employees in their daily duties and act as a preventative measure.

General Accounting Office

The IG Act states that each inspector general shall give particular regard to the activities of the Comptroller General of the United States with a view toward avoiding duplication and ensuring effective coordination and cooperation.

GAO has two ongoing reviews involving NLRB. One study is to determine the extent to which federal agencies have contracted with companies that have violated federal labor, environmental, or tax laws, including the nature and extent of such violations. The Chairman, House Subcommittee on Government Management, Information, and Technology made this request on July 24, 2000.

The second study is to explore improvements to the offices of inspectors general that address overall effectiveness and enhancements to their independence. The Chairman, House Committee on Government Reform, made this request on March 5, 2001.

INFORMATION REQUIRED BY THE ACT

Certain information and statistics based on the activities accomplished during this period are required by section 5(a) of the IG Act to be included in the semiannual reports. These are set forth below:

Section 5(a)

AUDIT REPORTS BY SUBJECT MATTER

Table 1 -- REPORTS WITH QUESTIONED COSTS

Table 2 -- REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE

Fraud Waste Abuse -
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Call the IG HOTLINE
800 736-2983

Or Write to the
Office of Inspector General
NLRB
1099 14th Street, NW
Washington, DC 20570