Working with the OIG on Risk Makes Sense

March 2, 2016 | By Jerry Ashworth | Post a Comment

6a00d8341c68bf53ef016301e5715c970d-800wiLast month, I attended the Association of Government Accountants’ National Leadership Training in Washington, D.C. During one presentation, several key federal agency leaders discussed enterprise risk management (ERM) and how now is the time for federal agencies to assess their program and financial risks, prior to a new presidential administration entering office next year. For more on this session, Thompson grants subscribers can check out a story we wrote on the session at the Grants Compliance Expert website.

For those unfamiliar with enterprise risk management, ERM allows agency heads better identify those risks by collaborating with staff to determine where their weaknesses lie and the best ways to mitigate those risks. As defined by the Council of Sponsoring Organizations of the Treadway Commission (COSO), it is “a process, effected by an entity’s board of directors, management and other personnel applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.” Conducting ERM can help a governmental agency, or any entity for that matter, to develop a departmental risk profile and prioritize methods to mitigate those risks.

However, I really found myself in agreement with recommendations presented by Deborah Jeffrey, inspector general for the Corporation for National and Community Service, who encouraged federal agencies to collaborate with their Office of Inspector General (OIG) when using ERM to identifying risks. “IGs can contribute value; we know about risk,” she said. “We learn about the agency’s risks during the course of audits.” But it was what she said next that really hit home. “The IG may be the only people in the agency with no policy agenda. I can tell you things you need to know that others won’t tell you. If we can pull in the same direction and collaborate, it will be better for taxpayers.”

Many people outside the federal government generally don’t trust the federal government, feeling that everything is ruled by politics. Everyone in Washington has an agenda and they will spin everything to meet their whims, they say. However, auditors within the federal Offices of Inspector General are not swayed by the policies of their agencies, and if they find weaknesses and risks, they will be forthcoming with recommendations to address those issues.

Jeffrey further added that ERM can help agencies better understand the costs and resources required to manage their risks, enabling them to justify those costs when Congress appropriates program funds. Another good point.

Federal agency officials can learn a lot from their OIGs and should be willing to work with them more often to ensure that they are running federal programs effectively and reducing risks. It will be better for all of us in the long run.

Let us know what you think about having the OIGs work more with federal agencies to reduce risk.


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