Summary: Pursuant to a congressional request, GAO provided information on the Minerals Management Service's (MMS) audits of oil and gas royalty payments, focusing on the: (1) status of the MMS audit program; (2) effect of a 3-year audit acceleration effort by MMS; (3) MMS cost-benefit analysis that it used to support its proposal to hire contract auditors; and (4) possibility of auditor conflicts of interest and steps MMS has taken to address that issue.
GAO found that: (1) MMS had resident audit staffs at the 12 largest royalty payors, had completed audits of 16 other major payors, and had ongoing audits at 47 other major payors; (2) the 3-year acceleration effort will make the MMS audit program more current, and MMS will move from a 12-year audit cycle to a 6-year audit cycle by fiscal year (FY) 1993; (3) MMS did not prepare a cost-benefit analysis to support its decision to hire contract auditors or consider hiring temporary federal employees to complete the audits; (4) it could not determine whether MMS had taken sufficient steps to prevent auditor conflicts of interest; and (5) neither MMS nor the Department of the Interior adequately justified the proposal to hire contract auditors.
