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April 1, 2013–September 30, 2013

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Message from the Inspector General

On behalf of the Office of Inspector General (OIG) of the Board of Governors of the Federal Reserve System (Board) and the Consumer Financial Protection Bureau (CFPB), I am pleased to present our Semiannual Report to Congress, which highlights our accomplishments and ongoing work for the six-month period ending September 30, 2013.

In our prior Semiannual Report to Congress, I introduced our new vision, which underpins our strategic plan for 20132016: "To be the trusted oversight organization for the Board and the CFPB." As we began to implement our strategic plan during this reporting period, we identified the following priorities.

We are striving to meet the needs of our stakeholders. Our new organizational framework, implemented at the end of the prior reporting period, enables us to provide more consistent and timely oversight of the Board and the CFPB while remaining sufficiently nimble to respond to changing circumstances. Further, our online Work Plan, which is updated about every two weeks, informs our stakeholders of our completed work, our work in progress, and our planned projects. This Work Plan provides stakeholders with an unparalleled level of transparency and real-time updates of our work.

We are focusing our oversight initiatives on alignment with the Board's and the CFPB's strategic goals. Examples of our work for the Board include projects on the cost management of the estimated $180 million project to renovate the Martin Building and construct a visitors' center and conference center, the cost effectiveness and potential operational efficiencies of information technology services across Board divisions, and the economy and efficiency of the operations of the Board's Law Enforcement Unit.

The CFPB is continuing to develop policies, procedures, and other safeguards around its operations. In its strategic plan, the CFPB has specifically indicated that it will focus on working to ensure "effective and efficient management, protection of the CFPB resources, rigorous internal controls, and full compliance with the law." Our ongoing audits and evaluations of the CFPB's Civil Penalty Fund, supervision program, and hiring process, as well as its strategy to integrate enforcement attorneys into the examination process, will provide the CFPB with an objective perspective on these programs and processes and will offer sound recommendations for programmatic and operational improvements. In addition, the CFPB states that it will achieve its mission and vision through data-driven analysis and innovative use of technology. To that end, we have undertaken two information technology audits on the CFPB's use of cloud computing, as well as the required annual audit of its information security program, to help the agency ensure that its data are appropriately protected.

We are conducting audits and evaluations designed to identify operational and programmatic risks and make recommendations to reduce those risks. We completed four important projects during the reporting period relating to internal controls, which are the first line of defense in safeguarding assets and preventing and detecting errors and fraud. For the Board, we found that it could benefit from an agency-wide process for maintaining and monitoring administrative internal control, and in a separate report, we found that the Board should strengthen controls over the handling of the Federal Open Market Committee meeting minutes to prevent future early releases of this information. For the CFPB, we audited its purchase card and government travel card programs and made recommendations to strengthen the internal controls of those programs. Effective internal controls in these programs will result in improved stewardship of government resources and better prevention and detection of fraud or mismanagement.

We are engaging our stakeholders directly and frequently. OIG officials meet with their Board and CFPB counterparts on a regular basis to glean their feedback on ongoing and planned audits, evaluations, and inspections. We have hosted officials from the Board and the CFPB to discuss with OIG staff the work they do, areas of risk they foresee, and meaningful oversight we can provide. Importantly, we reach out to members of Congress through briefings, correspondence, and other informal channels to ensure that they are accurately informed about the work we do, the authorities we have, and the seriousness with which we regard our oversight responsibilities for our two agencies. Issues we have discussed with Congress include information technology security, contract management, internal controls, and bank supervision and regulation. Additionally, we are active in the Inspector General community, with our senior leadership holding positions on several committees of the Council of the Inspectors General on Integrity and Efficiency.

Our Office of Investigations continues to participate with our federal law enforcement partners in conducting complex fraud investigations. Our agents' participation in these investigations over the past six months has resulted in multiple criminal sentencings, indictments, restitution orders, and fines totaling nearly $342 million. Our investigators are dedicated to the prevention of waste, fraud, and abuse, and they continue to work closely with our stakeholders on investigative matters.

I appreciate the continued support we have received from Board and CFPB senior management as we work toward improving the effectiveness and efficiency of their programs and operations. Finally, I would like to thank the OIG staff for implementing our new vision and for their exemplary work during this reporting period.

Sincerely,

/signed/

Mark Bialek  
Inspector General  
October 31, 2013