The Department of the Interior lacks assurance it is receiving full compensation for oil and gas produced from federal lands and waters because its Bureau of Land Management and Offshore Minerals Management are not fully conducting production inspections as required by law and agency policies, GAO has concluded as part of an ongoing investigation.
It told a House Natural Resources subcommittee recently that the Minerals Management Service’s financial management systems are inadequate and lack key internal controls, and noted that, according to BLM officials, just eight of 23 field offices in five key states had completed required production inspections in fiscal 2007.
OMM officials told GAO they had completed about half of the required production inspections in calendar year 2007 in the Gulf of Mexico, according to GAO-08-560T.
It said MMS’s financial management system also lacks an automated process for routinely and systematically reconciling production data with royalty payments.
As part of its compliance effort, MMS does not consistently examine third-party source documents to verify whether self-reported industry royalty-in-value payment information is complete and accurate, GAO said.
It said that in 2001 MMS began using more compliance reviews and fewer audits, which are more thorough, but MMS was unable to say what portion of its annual performance goal was achieved through audits as opposed to compliance reviews.
