Obama’s Auditing Vacancies Leave Vacuum, Watchdogs Say

President Barack Obama’s failure to appoint inspectors general to five cabinet-level agencies, including the Pentagon, is putting taxpayer money at risk, oversight groups said.

The departments of State, Homeland Security, Labor, Interior and Defense don’t have permanent audit chiefs. Those five positions, as well as the U.S. Agency for International Development, are subject to confirmation by the U.S. Senate.

Inspectors general are independent officials who typically remain outside of an agency’s management structure and have the authority to investigate their departments’ actions.

The vacancies are gaining attention following the Treasury Department inspector general’s May 14 report on the Internal Revenue Service’s scrutiny of the tax-exempt status of small-government advocacy groups.

The IRS first disclosed last week that it had singled out groups for extra examination based on whether their names included words such as “tea party” and “patriot.” Lois Lerner, a mid-level agency official who oversees tax-exempt groups, acknowledged the practice and apologized.

“The only reason the IRS admitted targeting conservative groups with improper and intrusive scrutiny after three years is because they knew the inspector general report was due to be released,” said Richard Manning, a vice president for public policy and communications at Americans for Limited Government, a free-market advocacy organization based in Fairfax, Virginia.

‘Ineffective Management’

While the inspector general’s report blamed “ineffective management” at the IRS for inappropriate and slow handling of applications for tax-exempt status, it didn’t find evidence of partisan motivation or influence from outside the agency.

The report said “inappropriate criteria were used to identify tax-exempt applications for review.”

Nevertheless, the disclosure of the tax-status reviews has triggered four congressional inquiries and a U.S. Justice Department criminal investigation. Obama said yesterday that Treasury Secretary Jacob J. Lew asked for and has accepted the resignation of Steven Miller, the acting IRS commissioner.

Joe Newman, communications director at the Project on Government Oversight, a Washington watchdog group, said the IRS controversy puts inspector general vacancies in the “spotlight.” It serves as a “prime example of why IGs are important,” he said.

A White House spokesman didn’t immediately respond to an e-mail seeking comment on the vacancies.

‘Suffering’ Taxpayers

Newman cited a 2012 report by General Services Administration Inspector General Brian Miller that revealed lavish spending by the agency at a conference near Las Vegas. That work highlighted the value of independent scrutiny of government spending.

GSA Administrator Martha Johnson resigned amid the scandal, and the inspector general referred the matter to the Justice Department.

While acting inspectors general and career staff perform auditing work during a vacancy, they don’t have the same degree of independence as a presidentially appointed official, Newman said. Those appointees can only be removed by the president, who is required to notify Congress of any dismissal or reassignment.

“Taxpayers are suffering because you don’t have people in those positions, who are independent and aggressive,” Newman said.

Lawmakers such as Senator Carl Levin, a Michigan Democrat, and Senator John McCain, an Arizona Republican, urged Obama in a Jan. 24 letter to fill the vacant positions.

“A sustained absence of permanent leadership is not healthy for any office -- particularly one entrusted with as important and challenging a mission as an Office of Inspector General,” according to the letter.

The senators were particularly concerned about the State Department, which they wrote has “lacked a permanent leader since January 2008.”

To contact the reporter on this story: Danielle Ivory in Washington at divory@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

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