Inspector General Policies

Inspector General One of the most important aspects of government is trust. This is because the people rely on administrators to do the right thing and always take their well-being into consideration. The Inspector General has the power to investigate and indentify problems with various labor laws and the Department of Labor. A recent study uncovered major problems when it came to employee pension plans. To fully understand what is happening requires examining the study.

This will be accomplished by looking at common themes from the report and areas to improve upon critical weaknesses. Together, these different elements will illustrate how to deal with key challenges when it comes to the way various policies and directives are enforced. ("Semi Annual Report to Congress," 2012) The Common Themes from the Inspector General's Report The Inspector General (IG) found that the Department of Labor was making progress in enforcing different regulations and guidelines.

The result is that transparency has improved among the department and different stakeholders they are interacting with. Evidence of this can be seen with the IGs report saying, "The OIG's investigative work also yielded impressive results, with a total of 257 indictments, 293 convictions, and $36.8 million in monetary accomplishments.

Results highlighted in this report include that the following: The founder and former president of the National Association of Special Police and Security Officers in Washington, D.C., was sentenced to 76 months in prison and ordered to pay restitution of more than $252,000 for stealing funds from the union's pension plan. The former president of Massey Energy Company's Green Valley Resource Group was sentenced in West Virginia to 42 months of incarceration for his role in conspiring to impede MSHA inspections and to violate mine safety and health laws.

A Louisiana woman was sentenced to 57 months in prison for creating false identification documents and impersonating a federal Occupational Safety and Health Administration trainer. A New Jersey man was sentenced to 27 months in prison and ordered to pay restitution of more than $1.6 million for his role in an Unemployment Insurance fraud scheme." ("Semi Annual Report to Congress," 2013) These insights are showing how the IG is helping to prevent fraud and abuse by actively investigating various practices / claims. This proactive approach has improved accountability within the department.

In the future, this will make the process more responsive to the needs of stakeholders and embrace higher standards of oversight. Better than the IG One of the biggest challenges the IG is facing moving forward, is underfunded pensions. This is problematic as the Department of Labor has the responsibility for ensuing that the various polices from the Employee Retirement Income Security Act (ERISA) are enforced. This law allows officials to determine if employers are following various pension guidelines. In the last two decades, these areas have become strained.

This is from a lack of resources and personnel. To make the situation worse, many firms began to invest in alternative strategies. These are assets that will not be subject to state / federal regulations and very risky. This leads to a lack of accountability inside many pension funds. The problem has become so extreme, that actuaries are estimating pension funds to be underfunded by $3 trillion. The challenges are determining where the investments occurred and if they will have an impact on the performance of these funds.

("Semi Annual Report to Congress," 2013) Evidence of this can be seen with the report saying, "Uniform guidance for hard-to-value alternative investments was lacking. We found EBSA had not yet implemented recommendations from the ERISA Advisory Council, the Government Accountability Office, and the American Institute of Certified Public Accountants to provide guidance to fiduciaries using alternative investments. Hard-to-value alternative investments lacked appropriate and independent valuation. Approximately 90% of plans we sampled either did not obtain independent valuations or did not demonstrate an analytical process to determine their fair market value.

These plans also relied on client statements and general partners' estimated values without additional analysis to ensure that the alternative investments were reported at fair market value." This is illustrating how a new approach must be taken. To address these changes, requires having more clarity as to what they should be valued and the standards they use. ("Semi Annual Report to Congress," 2013) In many ways, one could argue that the loopholes in these areas are what encourages fraud inside various corporations.

For instance, one the ways Enron was able to defraud investors was through a series of off the book partnerships. These were entities created to hide the losses the company was experienced in failed projects around the world. The problem is these practices were illegal. However, the use of the partnerships was seen as an alternate investment vehicle. (Kearney, 2004) (Santisos, 2012) Those who owned shares in these firms were compensated with Enron's common stock. At the time, no one had any problems with this approach with the stock valued so high.

However, once the economy began to slow, is when the price collapsed. This meant that these individuals in these partnerships were demanding more stock which was heading lower. In late 2001, these areas contributed to one of the largest bankruptcies in U.S. history. The pension fund was effectively wiped out from the inability of employees to sell their stock in the company. The result is that nearly everyone at the firm lost their retirement savings.

(Kearney, 2004) (Santisos, 2012) The lessons from this example are showing, how the Department of Labor needs to take a more proactive approach when it comes to pensions funds. One possible strategy is for Congress to change the laws and requires these entities to invest in preapproved products. At the same time, the department could work with them to address the shortfall by having a stepped process of gradually raising contributions. If this was to occur and.