Senator Grassley prods U.S. CFTC watchdog on sloppy auditing

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U.S. Senator Charles Grassley is pressuring the inspector general of the nation's futures regulator to prove that his office has cleaned up its auditing procedures, after the internal watchdog flunked a peer review in 2011.

In a letter dated Jan. 25, the Iowa Republican demanded a briefing and internal documents from Commodity Futures Trading Commission Inspector General A. Roy Lavik.

"I remain concerned that the CFTC's Office of the Inspector General's preparation for the peer review and the subsequent responses to the deficiencies may call into question whether the recommendations for improvement have been fully implemented," Grassley wrote.

Lavik, who has been in office since 1990, said he was "reasonably confident and hopeful" that he would satisfy Grassley's concerns. His office had hired an accountant, Lavik said, remedying a gap that Grassley had rightly pointed out.

The inspector general's office is responsible for rooting out waste, fraud and abuse at the CFTC. It is charged with overseeing audits of agency programs, as well as investigations into alleged wrongdoing.

Every three years, audits conducted by inspectors general must undergo peer reviews to ensure they are complying with proper procedures and have internal controls in place.

According to auditing experts, it is uncommon for an inspector general to receive a failing peer review.

But in March 2011, Federal Election Commission Inspector General Lynne McFarland gave Lavik's office a failing grade, saying it did not meet government standards for properly documenting its budget requests and often did not follow certain quality control processes.

In addition, the review found that Lavik had not corrected prior failings uncovered in a 2007 review.

Since the 2011 report, Grassley, who sits on the Senate Agriculture Committee and is a vocal proponent of strong government oversight, has been tracking the progress of Lavik's office.

In Lavik's semiannual report to Congress for the period ending March 2012, he told lawmakers that his office had corrected all of the problems as of September 2011.

Grassley, however, said he was skeptical because the FEC's inspector general had so far not conducted any follow-up to verify whether the recommendations had been implemented.

"Congress depends on the Inspector General's office to ensure that the Department or Agency is spending taxpayer dollars wisely," Grassley wrote.

He added that he wanted Lavik to provide "detailed documentation" to demonstrate the problems were all resolved. (Additional reporting by Douwe Miedema; Editing by Lisa Von Ahn)



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