U.S. Department of State Fiscal Year 2019 Agency Financial Report

I ntroduction This report is provided in accordance with the Reports Consolidation Act of 2000. 1 Each year, the Office of Inspector General (OIG) for the Department of State (Department) identifies the most serious management and performance challenges facing the Department and provides a brief assessment of the Department’s progress in addressing those challenges. We assess progress primarily through our compliance process, which relates to individual and often targeted recommendations. Our oversight work, however, gives us unique visibility into the most significant challenges facing the Department. We note that our work this year was affected by the lapse in appropriations that occurred from December 21, 2018, to January 25, 2019. Although this lapse affected all of OIG, it had particular consequences for our inspection work, as we were forced to cancel our winter inspection cycle. Nonetheless, we issued more than 105 reports in FY 2019, and based on a thorough review of that work and past work, we identify the following major management and performance challenges the Department faced in FY 2019: 1 The Reports Consolidation Act of 2000, § 3, Pub. L. 106-531 (amending 31 U.S.C. § 3516). 1 Protection of people and facilities 2 Oversight of contracts, grants, and foreign assistance 3 Information security and management 4 Financial and property management 5 Operating in contingency and critical environments 6 Workforce management 7 Promoting accountability through internal coordination and clear lines of authority We have included within this document examples of reports and findings that are particularly illustrative or noteworthy on certain points. In addition to publicly available work, OIG issues a number of Sensitive But Unclassified and Classified reports throughout the year. Many of the findings in those reports reinforce our assessment of these management challenges, particularly as they relate to protection of people and facilities and information security and management. We note that these challenges often interact, overlapping and reinforcing one another. For example, protecting people and facilities is often a challenge in contingency and critical environments, and workforce management challenges are frequently found at the root of deficiencies related to contract and grant oversight. Likewise, weaknesses related to poor coordination and unclear lines of authority contribute to a range of concerns, including information security deficiencies. Inspector General’s Statement on the Department’s Major Management and Performance Challenges Inspector General, Steve A. Linick PRINCIPAL FINANCIAL STATEMENTS | FINANCIAL SECTION 2019 A gency F inancial R eport U nited S tates D epartment of S tate | 111 Other Information SECTION III: