Should every agency have an IG?

Effective government oversight might seem like a pure notion, but the best ways to hold agencies accountable are less obvious.

According to a 2011 study by the Government Accountability Office, 30 departments and agencies have presidentially appointed inspectors general, 33 have IGs appointed by their respective leaders, and 10 have IGs who are appointed by other means. Presidential appointees must go through the sometimes arduous process of Senate confirmation to verify their ability to be objective, while the independence of IGs appointed by agency leaders can be called into question.

"It just never has made sense to me that you would have an IG that's actually hired by the person that they're supposed to be overseeing," said Sen. Claire McCaskill (D –Mo.), chairwoman of the Senate Homeland Security and Governmental Affairs Committee's Financial and Contracting Oversight Subcommittee, at an April 10 hearing.

Peggy Gustafson, the Small Business Administration's IG and chairwoman of the Legislative Committee of the Council of the IGs on Integrity and Efficiency, told the subcommittee that the IG Act of 1978 is effective at making IGs independent.

"I have come to really appreciate how strong the IG Act is," Gustafson said. "IGs are given a great deal of independence through that act, [regardless of] whether you're a presidential appointee."

She argued that IGs' power and independence are not dictated by how they are appointed. "It depends on who the IG is," she said. "I think you can be an IG who's a presidential appointee and allow yourself to get pushed around, or you could be [appointed by the top agency leader] and completely stand up. So in the end, it really is about the quality of the person."

However, Beryl Davis, director of financial management and assurance issues at GAO, testified that although oversight is crucial for federal agencies, there are alternatives to IGs that are more cost-effective, especially for smaller entities.

"GAO has long supported the creation of independent IG offices in appropriate federal departments, agencies and entities," Davis said. "At the same time, we have reported some concerns about creating and maintaining small IG offices with limited resources, where an IG might not have the ability to obtain the technical skills and expertise needed to provide adequate and cost-effective oversight."

Davis said GAO believes "there are alternative approaches that the Congress may wish to consider to achieve IG oversight that [are] appropriate for federal agencies with relatively small budgets and resources."

Among those approaches is using an IG from a large agency to provide oversight for a smaller but similar entity.

Michael Carroll, acting IG at the U.S. Agency for International Development, said having one IG oversee numerous entities works for USAID and its organizations, but it's not always easy.

"It is a challenge to stay focused on the smaller organizations when you have large organizations that you're overseeing," Carroll said. "It's not impossible and it's certainly doable, but…the IGs really have to stay focused on their entire portfolio."

All the agencies Carroll oversees are in the international sphere, which allows him to develop an expertise of sorts that a contracted auditor, who might have more independence, would lack.

"We understand the systems, we understand the vulnerabilities, we understand the business model, and I think that's a benefit rather than a disadvantage," he said.

Earlier this year, Sens. Jon Tester (D-Mont.) and Mike Enzi (R-Wyo.) introduced a bill -- which McCaskill has co-sponsored -- that would amend the IG Act to address some of those issues. The measure proposes IG pay standards for each federal agency and shields ongoing IG investigations from various disclosure requirements and Paperwork Reduction Act restrictions. However, the bill does not tackle the fundamental question of which agencies should have IGs and how they should be appointed.

Ultimately, Davis said, that is legislators' call to make. "These alternatives for oversight should be decided on a case-by-case basis depending on the critical nature of the small agencies' missions and the risks identified that require increased oversight," she said. "The determination of where and how to provide IG oversight...is a policy decision addressed best by the Congress."