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The OHC established control activities in the form of policies and procedures related to recruiting and selecting staff, and recent OHC initiatives have strengthened internal controls. Our testing of select controls over the recruitment and selection processes in effect during our review period revealed, however, that OHC personnel did not always follow the control activities established to enforce management's directives. In addition, we found that internal controls can be further enhanced. For example, the agency can improve its ability to track and measure the timeliness of its hiring as well as monitor recruitment and selection activities for potential deficiencies. According to GAO's Standards for Internal Control in the Federal Government, internal control contributes to management's ability to efficiently and effectively achieve its goals and objectives. Thus, effective internal control contributes to the CFPB's ability to recruit highly qualified staff in a timely manner. By effectively implementing controls, the OHC can help ensure that its internal policies are followed and that potential process improvements are identified.
The OHC has established control activities, such as those embodied in its recruitment and selection policies and procedures. However, our control testing showed instances in which OHC personnel did not consistently follow OHC policies and procedures.
Our testing of select controls related to hiring activities found that the vacancy announcements within our sample,15 which included waiver-authority positions,16 were posted on USAjobs.gov or consumerfinance.gov, and applicants' experience and minimum qualifications were assessed. In addition, a position description was established and approved prior to posting the vacancy announcement. For the vacancy announcements we reviewed, however, we found that not all job analysis forms had evidence of managerial approval.
The OHC uses job analysis forms to document the knowledge, skills, and abilities that are essential to the position or to enhance performance in the position. This analysis informs how the OHC develops its assessment criteria for each position. The OHC's SOP, Hiring Process (Recruitment), requires an OHC administrator and the hiring manager to validate and approve the job analysis for each vacancy announcement. The job analysis forms for 18 of the 20 vacancy announcements we reviewed did not have evidence of the hiring manager's approval, and 9 of those 18 did not have evidence of the OHC administrator's approval. Without an appropriately validated and approved job analysis form, the OHC cannot be certain that the knowledge, skills, and abilities essential to a position are identified and considered during the recruitment and selection process. The job analysis form, which facilitates this requirement, had a signature line only for the OHC administrator; however, the form has since been revised to include a signature line for the hiring manager.
In our review of a sample of recruitment incentives, we found instances in which incentive requests and service agreements were not completed using forms prescribed in the OHC's incentive policy. For example, none of the recruitment incentives we reviewed were authorized using the required incentive request form, which the OHC's incentive policy requires to be signed by the Chief Human Capital Officer, the Chief Operating Officer, the relevant manager, and the applicable Associate Director. Although our review of ad hoc documentation that personnel created found that not all required signatures were obtained, each of the five recruitment incentives in our sample was reviewed and approved by either the Chief Human Capital Officer or the Director of the CFPB (and thus was in compliance with applicable regulations).17
We also found that none of the recruitment incentives we reviewed were issued using the required service agreement form established by the CFPB's internal policy. The OHC's incentive policy requires the use of a specific service agreement form that includes information consistent with specific requirements set forth in title 5, section 575.110, of the Code of Federal Regulations. Each employee who receives a recruitment incentive must sign a service agreement with the OHC acknowledging that he or she must fulfill the required time in service to be eligible for the full amount of the incentive. Because the appropriate service agreement form was not used for any of the five recruitment incentives we reviewed, these recruitment incentives were issued without specifying the method of paying the incentive and the timing and amounts of each incentive payment, which is information consistent with title 5, section 575.110, of the Code of Federal Regulations. OHC management acknowledged that service agreements for the recruitment incentives we reviewed were not issued using the required service agreement form in accordance with OHC policy.18
Based on observations about recruitment incentives that we communicated to the CFPB, the OHC completed a review in December 2014 to assess whether sign-on bonuses were appropriately documented. The review covered sign-on bonuses extended to employees from July 31, 2011, through June 17, 2013.19 Consistent with the OIG's observations, the OHC found instances when forms required by the OHC's incentive policy were not used to document the approval and issuance of sign-on bonuses. The OHC stated its intention to fully comply with the incentive policy by using the required forms, including the incentive request form and service agreement form. By using the required forms, the OHC can better ensure that recruitment incentives are appropriately issued in compliance with OHC policies and in a manner consistent with applicable regulations.
The OHC has improved certain controls related to the recruitment and selection activities we reviewed. The OHC hired an internal control specialist in April 2013 to help identify gaps in the office's internal control framework and to support the OHC's efforts to implement monitoring initiatives. In addition, we noted three recent OHC initiatives that improved internal controls for recruitment and selection.
Notwithstanding these improvements, our evaluation identified areas in which enhanced internal controls can assist the OHC in achieving its recruitment and selection goals.
The OHC has four key performance metrics related to human capital: (1) workforce technical competence, (2) workforce diversity, (3) quality of hire,20 and (4) staffing efficiency.21 At the time of our review, we found that the OHC had finalized three performance metrics related to the OHC's hiring process; however, as of December 31, 2014, it had not yet finalized the staffing efficiency performance metric, which assesses hiring timeliness.
The Presidential Memorandum and OPM guidance state that agencies are expected to set specific targets for measuring success in their efforts to reduce the time it takes to hire employees. In reviewing the time taken to fill vacancy announcements, we found that the OHC has not developed procedures to compare actual performance to specific target completion dates for each step in the CFPB's hiring process. The OHC provides reports quarterly to CFPB senior management on the time it takes hiring managers to select an applicant from the certificate of eligibles, but it does not track other key steps in the hiring process and compare them with targeted completion dates.
The OHC is in the process of developing an internal policy that documents the target completion dates for each step in the hiring process and the procedure for tracking and reporting on hiring performance. Additionally, to implement the staffing efficiency performance metric, the OHC is designing an end-to-end hiring timeline using the steps identified in OPM's 80-calendar-day standard. The OHC has initiated efforts to track, monitor, and report on steps in the hiring process and has worked with BFS ARC to receive reports for BFS ARC's hiring steps. While the staffing efficiency performance metric has not been fully implemented, these efforts will help inform the OHC's draft internal policy on target completion dates. Finalizing this internal policy and implementing the staffing efficiency performance metric will assist the CFPB in adhering to the goals of the Presidential Memorandum and OPM guidance by measuring the timeliness of the CFPB's hiring process and providing data to inform any improvements, if needed.
During our review period, the OHC completed a detailed survey to identify and evaluate the adequacy of internal controls in its office as well as across the CFPB. The OHC's survey is part of the CFPB's agency-wide continuous monitoring and periodic evaluation activities, which include an agency-wide risk assessment. However, the results of the OHC's most recent survey did not evaluate the adequacy of internal controls specifically related to the CFPB's recruitment and selection processes.
According to GAO's Standards for Internal Control in the Federal Government, the monitoring of controls can help identify deficiencies and ensure that issues are promptly resolved. The CFPB's Chief Operating Officer said that the CFPB's agency-wide evaluation activities could be enhanced to monitor risks related to the recruitment and selection processes. The OHC plans to formally document all existing monitoring activities, develop new monitoring activities, and establish a schedule to formally review and assess the results of these monitoring activities. As of December 14, 2014, the office had not yet completed the effort to formally document all current monitoring activities for recruitment and selection processes. Until comprehensive monitoring activities are implemented, the OHC cannot fully assess whether internal control activities related to the CFPB's recruitment and selection processes are designed and operating effectively.
Although the OHC established control activities in policies and procedures, we found that certain control activities were not always followed and monitoring activities were not fully developed. The OHC has taken action to improve its internal control framework by completing a review of recruitment incentives and establishing a central directory of SOPs. In addition, the OHC is in the process of establishing a policy and finalizing the staffing efficiency performance metric that will better enable the agency to assess the timeliness of its hiring process. By enhancing its monitoring activities and completing efforts related to measuring hiring timeliness, the OHC can further improve its internal control framework, help ensure that control activities are functioning as designed, and more effectively evaluate the efficiency of its hiring processes.
We recommend that the Chief Human Capital Officer
The Chief Human Capital Officer concurs with our recommendations. For recommendation 1, the Chief Human Capital Officer states that the OHC will formally document all activities that are currently being performed around the recruitment and selection process, including new monitoring activities that will be developed. Additionally, the Chief Human Capital Officer states that the OHC will establish a schedule on which to formally review and assess the results of monitoring activities. These efforts are scheduled to be completed by March 31, 2016.
For recommendation 2, the Chief Human Capital Officer states that since the conclusion of the OIG's evaluation, the OHC has implemented an automated tool to track the completion dates for each step in the hiring process. This tool will be used to determine baseline performance and then to set target completion dates for each hiring step. The Chief Human Capital Officer also notes that once target completion dates are set, the OHC will finalize an internal policy to document the metrics that it will track and report. These efforts are scheduled to be completed by December 31, 2015.
The actions described by the Chief Human Capital Officer appear to be responsive to our recommendations. We plan to follow up on the CFPB's actions to ensure that all recommendations are fully addressed.