Monthly Archives: March 2010

Journal of Inspection and Oversight

The Association of Inspectors General is pleased to accept for review professional journal articles concerned with all aspects of the inspector general concept, inspection and oversight, and good governance.

What to send

The Association asks that Journal articles serve to educate the Inspector General Community. Articles can focus on a particular case or event, but should present some form of ―lessons learned.‖ What con-clusions or generalizations can be made that serve to help, enlighten or inform the reader?

  • Length: submissions should be between 2,000 and 4,500 words (approximately four to seven single spaced pages).
  • Place lengthy citations in footnotes. Please include a brief author biography.

Please send manuscripts, saved and attached in MS Word or Rich Text Format, to the editor: Professor Jay Hamilton ( Please include “AIG Journal Submission” in the subject line.

Who can submit journal articles

  • Individuals or groups/teams
  • Not offices or agencies
  • Please, no ghost writers, but group/team authorship can include designation of a principle author (or communicating author) who is not necessarily the person who writes the most or puts in the most time.

The Association and Editorial Board ask authors to include a disclaimer of responsibility and opinion in their paper. For example the first footnote could contain a short disclaimer: Jane Doe is the title for the agency. She wishes to thank John Doe, etc. for comments on earlier drafts. Jane Doe is solely responsi-ble for the opinions and errors.

Newsletter Articles

The Association also publishes a quarterly newsletter.  Shorter articles (under 800) words can be sent to the editor: Professor Jay Hamilton ( with “AIG Newsletter” in the subject line. The Newsletter is an excellent medium for case resolutions, conviction announcements, appointments and other news.

Forensic Auditors – Worth Their Weight in Gold

By Steven A. Pasichow, MPA, CIG
Assistant Inspector General
Assistant Director of Investigations

In 2000, a Forensic Auditor working for the Office of Inspector General (OIG) for The Port Authority of NY & NJ (Port Authority) was conducting a pro-active random review of internal audits that had been performed on cost plus work invoices submitted by a contractor working on asbestos abatement work under several time-and-material contracts over several years at various Port Authority facilities, including the John F. Kennedy International Airport (JFKIA).

The Forensic Auditor made a comparison of the vendor invoices that had been submitted to support the unit prices billed for materials, to the amounts billed by other contractors performing similar work. This comparison disclosed that the amounts billed far exceeded prices charged for the same items. Further review uncovered that the material―suppliers were not legitimate vendors and that the checks issued by the contractor to the suppliers, were all slightly under $10,000 and had been cashed at several check cashing establishments. The material charges had been reviewed and approved for payment after routine cost plus audits were performed because the costs had been supported by suppliers invoices and had been documented by canceled checks from the contractor to the vendor.

During the course of the asbestos investigation, evidence of unrelated wrongdoing was uncovered against additional Port Authority employees, including the Chief Engineer for JFKIA, who were charged separately from the enterprise corruption indictment. These employees pleaded guilty to accepting renovations and other improvements to their residences from contractors whose work they were overseeing for the Port Authority.

The first trial from this five-year old indictment, involved the remaining two defendants, Port Authority engineers, who chose trial over pleading guilty. On December 5, 2009, they were convicted after a six-week jury trial on enterprise corruption and other related charges. They were convicted of taking bribes to let a company overcharge for work on projects including the World Trade Center cleanup. This company, that was responsible for cleaning up crushed police cars, pieces of steel and other objects recovered from the destroyed twin towers, inflated equipment expenses and pumped up its payroll with no-show workers.

A Senior Engineer of Construction at JFKIA was responsible for managing certain construction projects on behalf of the Port Authority. He accepted tickets to professional sporting events and accepted several $2,000 loans from contractors he had oversight for at JFKIA. The contractors did not require the Senior Engineer to repay the loans.

The Senior Engineer also used for personal benefit the Pennsylvania home of a Port Authority contractor on approximately ten occasions. Additionally, he had a Port Authority contractor perform various construction work at this home, including: concrete work, which included the use of a dumpster at no cost to him and electrical work. He also directed a Port Authority contractor to put two of his sons on their payroll under his wife’s maiden name for one.

The former Manager of Environmental Field Operations of the PA’s Engineering Department was no stranger to criminal conduct in that he was pre-viously arrested in March 2003 by the OIG in con-nection with another joint investigation conducted with the U.S. General Services Administration Of-fice of Inspector General and the Official Corrup-tion Unit of the FBI. He was charged and convicted with bribe receiving and sentenced to one year in prison. With respect to the recent asbestos investigation, he accepted high priced tickets to rock concerts.

This case demonstrates the importance of the forensic auditing function within an inspector general’s office. By analyzing records that had been previously reviewed both engineering and internal audit staff, the forensic auditor was able to discover a pattern of inconsistencies, that when verified, disclosed that a massive fraud existed among contractors and their workers and agency engineers charged with the responsibility for the administration of government contracts.

The Forensic Auditor’s view of the world is different from other auditors and is an integral component of any investigative team.

2010 Winter CIGA Institute, Clearwater, FL

by the Pinellas 9

There was a great deal of anticipation as the ―Pinellas 9 arrived at the Clearwater Beach Hilton Hotel. We were about to enter the field of ―Inspector General Auditing. As it turned out, the weather was one of our best allies.
Winter struck the Northeast—where most of our instructors lived—causing 30 to 40 inch snow falls in some areas, except on the sunny beaches of Clear-water, Florida, the site of the 2010 Winter Institute. Well, the truth is it was freezing in Florida (lows in the 40’s and high of 60). OK so it wasn’t freezing, but we did have some rain. As a result, there was not much else to do but stay in the hotel or go home to study our materials. The week started with some instructors struggling with the record snow-falls, which delayed and canceled their flights. It was so bad that one instructor was unable to attend. As a result, some instructors had to teach sections that they were not initially assigned to teach. How-ever, they adapted, overcame and maintained a positive attitude and were effective in their presentations.
Then reality hit when we were presented with a 4 inch thick binder filled with 21 lessons of detailed information (approximately 500 pages). As students, we knew then we needed to remain focused all day, each day, throughout the week to increase our chances of success on the test. Clearly, the Institute is not for slackers! As the week progressed, we enjoyed the ―war stories, which helped to link the practical application of concepts and techniques.

  • Melinda Miguel was very at ease giving a number of presentations providing excellent examples related to her work experiences.
  • Cheryl Ferrara’s non-stop informational style kept us on-our-toes so as to glean as much in-sight as possible. Her stories of the on-site public works facility audits were amazing.
  • Bill DiVello’s varied experiences were presented in such a way that we seemed to live it with him. The $50 million embezzlement story was a real highlight of the week.
  • James Boyd was an excellent presenter also, with a number of practical experiences de-scribed.

Although some of us felt we had good working experience in many areas presented in the Institute, many of us had limited exposure to the Yellow Book standards. Our office follows the Interna-tional Standards for the Professional Practice of Internal Auditing or the Red Book standards. The instructors presented very good explanations of key concepts of the Yellow Book standards that are applicable to our work, and this is the area we learned the most. There were no surprises, albeit some topics such as statistical sampling and accounting had to be recalled from college courses of
yester year! As the material was presented, some of us tried to develop a study plan for that night to keep up with the material as we went through the week. Some of us knew it would not be a good idea to wait until the final night before the test to study for it and expect to be successful. An impor-tant tip: a highlighter and post-it-flags for pages really make studying easier when dealing with a 500 page manual. The instructors were helpful by emphasizing areas we could concentrate on for the exam, which helped in our study preparation. It is an understatement to say we were glad to see Fri-day finally arrive! The anticipation (or panic for a few) started to set in as we reviewed dozens of lists, standards and specific wording, covering 21 lessons over five days into 120 questions in prepa-ration for the BIG exam. As for the exam it was fair and comprehensive. There were easy questions (some maybe too easy), hard questions and some vague questions for which gleaning the meaning was truly a challenge. We would have gladly traded the vague questions for harder but meaningful ones.
All of us were relieved when we completed our exam, and now, we anxiously await our results. In any case, the Institute was challenging, a good learning experience, a chance for networking and a positive addition to our professional development.
Oh yea, who are the ―Pinellas 9? We are better known as the nine internal auditors from the Pinellas County Clerk’s Division of Inspector General who attended the Institute and collaborated on this article.

LA College Board Establishes Inspector General

The Los Angeles Community College District Board of Trustees approved establishing an Office of Inspector General and launching a whistle-blower program, a pair of additional steps to tighten spending controls on the District’s $6 billion construction effort.

The board voted during March to unanimously to adopt the inspector general and whistle-blower resolutions. The votes follow other recent board actions to more tightly manage the LACCD’s construction operation, also known as the Sustainable Building Program:

  • In November, the board authorized bringing in an outside firm, Capstone Advisory Group LLC, to conduct an organizational review of the building program. Capstone’s work still is under way, but its preliminary suggestions gave rise to today’s adopted resolutions to create an Office of Inspector General and the whistle-blower program.
  • The board also recently voted to reduce the “multiplier,” or markup, that firms participating in the management of the building program can charge the District for employing building program staff.

“We are taking these steps to tighten controls and ensure that taxpayer dollars are spent appropriately,” said Dr. Tyree Wieder, Interim Chancellor of the LACCD.

Most of the funds for the building program, which is carrying out major modernization efforts at all of the District’s nine colleges and has gained widespread attention for its environmental friendly practices, come from bond measures totaling $5.7 billion. The measures were passed by voters in 2001, 2003 and 2008

The Inspector General resolution, while noting that the building program undergoes annual audits, said that there also is “a need for ongoing monitoring of the management of bond-funded projects and appropriateness of related expenditures district-wide.” It said that the inspector general “will be responsible for the objective on-going review of performance, financial integrity and legal compliance of the bond construction program.”

The Inspector General will report directly to the Board of Trustees, with day-to-day oversight from the District Chancellor. The resolution does not specify either the budget for the Office of Inspector General or the length of service, but it potentially could continue through the completion of construction, which is expected in 2014.

The Office of Inspector General will have the authority to monitor, and recommend corrective steps on, contracting and all other business practices of the building program.