The Office of Inspector General (OIG) of the Federal Deposit Insurance Corporation (FDIC) issued its report on Controls Over Payments to Outside Counsel.
The FDIC’s Legal Division relies on Outside Counsel (OC) to assist with legal matters. Between January 2018 and March 2021 the Legal Division paid approximately $94 million to OC to support the FDIC’s interests in litigation and other legal matters. The FDIC must apply effective contract oversight in order to strengthen prudent management of FDIC resources and ensure that the FDIC receives goods and services as contracted.
Our Office conducted a review to determine whether the Legal Division’s review and oversight of payments to OC can be improved. We found that the FDIC Legal Division should improve its review and oversight of payments to OC in four areas:
- Analyzing data to monitor and assess the effectiveness of program controls for reviewing invoices received from OC;
- Enhancing its policies and procedures by adding specific guidance in certain areas in order to ensure the consistent interpretation and applications of its requirements;
- Communicating the results of the Post-Payment Review Program to those involved in reviewing and approving OC invoices to improve their understanding of requirements and identify areas where revised guidance is needed; and
- Providing training to all FDIC personnel responsible for the review and approval process for OC invoices to ensure requirements are consistently understood among existing staff and new hires.
We made eight recommendations to the FDIC to address the findings in our report.