What we're looking for-and again, in the process of gathering the information-I think they have a lot of the information already available. We're looking for more detailed breakdowns in terms of the audit coverage period, what specific leases will be covered, or, if they can't define that, what type of sampling plan they will use to select leases to be audited. What revenues would be covered? Who will have responsibility for the particular activities-a State, Tribal office, or MMS for specific payors or leases? Then, where there are not sufficient auditors available for proper coverage, where you have a larger payor, how will MMS supplement or complement the tribes and offices.

This should be all laid out in one package as an audit plan, as we do and all other audit activities do. We print that and publish that and send it to everybody and say, within our resources here's what we will accomplish during a given year. That serves as a basis to formulate your audit.

Mr. YATES. It seems to me, as a member of this Committee, that that makes sense.

We would like to know what you propose to do for the plan so that we could know whether or not you have enough auditors to do your job.

A few years ago you told us that you had enough auditors. We gave you 50 additional ones and you were grateful for that. Remember?

Mr. BETTENBERG. I do, very well.

Mr. YATES. Okay.

Now, we're trying to find out how we can help you to do your job in a way that we think it ought to be done, and that we hope you think it ought to be done. If you don't have enough people for the job, tell us. I don't care what OMB tells you about your limitations. Mr. BETTENBERG. Well, we don't care much about that either. Mr. YATES. Don't care much about what?

Mr. BETTENBERG. What OMB tells us about the limitations.

Mr. YATES. Well, you'd better strike that from the record. [Laughter.]

That's the bravest statement I've ever heard before this Committee. [Laughter.]

Mr. BETTENBERG. We've testified on the 50 auditors, of course.
Mr. YATES. Not very often.

Would you like to sit down, Ms. Fleischman? And Mr. Williams? I don't know why we're going around in circles here. We have a job to do. We the Committee have a job to do. We want to know how we can help you get your job done in a way that will take care of those whom you are supposed to be serving-those who are to receive the benefits of these royalties. They can only know how much they're to receive if you have audits.

Mr. BETTENBERG. I agree completely.

Mr. YATES. You agree completely with me. Okay.

Mr. BETTENBERG. And then we agree completely with the recommendation of the Inspector General.

Mr. YATES. Okay. Then why are we

Mr. BETTENBERG. I think perhaps what I'm responding to, and perhaps I'm overly sensitive to it

Mr. YATES. Perhaps you are.

Mr. BETTENBERG [continuing]. Is the comment that it took the Inspector General to "prod the Minerals Management Service into this" and the lack of recognition in their audit report and even when we responded with our comments and mentioned what we were doing again, having briefed them last August and gone through a closeout with them in Denver. They don't even bother mentioning those in their responses and in their testimony. I think that that's our concern.

Mr. YATES. Would you like to comment on that?

All right, you left something out. You left out what they're doing, apparently? Right?

Ms. FLEISCHMAN. Mr. Chairman, we asked for documents

Mr. BETTENBERG. Mr. Chairman, I think I can say that it will be one of our missions to satisfy them that what we have is in fact a plan.

Mr. YATES. I think you have to do that for the Inspector General. They have to-it's their job to tell you what they think you're doing wrong. They have tried to do that. You said that in kind of a hurt way, I thought, that they hadn't given you the credit that you deserve. Right?

Mr. BETTENBERG. As an organization.

Mr. YATES. As an organization.

Now, why hasn't the IG given them the credit that they deserve?

PROGRESS IN THE ROYALTY MANAGEMENT PROGRAM

Ms. FLEISCHMAN. Well, we believe that we have documented a great deal of progress on the part of MMS.

Mr. YATES. There was room for that, wasn't there?

Ms. FLEISCHMAN. Yes, there was.

Mr. YATES. Okay.

Ms. FLEISCHMAN. In our biennial report, and in our other reports, we have noted this specifically.

Mr. YATES. Yes, you have.

Ms. FLEISCHMAN. The MMS has progressed and we believe that they are committed to a more than adequate

Mr. YATES. What you're trying to say is that you're their friend. Ms. FLEISCHMAN. Well, we're the Inspector General and we try to be. In our audits we try to help management perform their mission more effectively and more economically. And that's what we at tempt to do when we do an audit. We give the draft, the final draft, of our report to the management of the audited entity and ask them for comments.

We're not in the business of not helping. We believe that we can offer some help.

Mr. YATES. Well, can they do their job without the plan?

Ms. FLEISCHMAN. We believe that it is necessary for an audit function, such as MMS or such as the Inspector General's office, to have a comprehensive, detailed audit plan.

Mr. YATES. Yes.

MS. FLEISCHMAN. And we expect that MMS is perfectly able to present such a plan.

Mr. YATES. But I can't get a plan out of Mr. Bettenberg. He doesn't want to give us a plan.

Do you, Mr. Bettenberg? Do you want to give us a plan?
Mr. BETTENBERG. Well, we definitely will give you a plan.

Mr. YATES. Okay. All right.

You heard him.

Mr. BETTENBERG. What I'm saying is that I think as of this date, the three basic elements of it they already have.

Mr. YATES. Well, Mr. Bettenberg, you're going to give us a plan. You've had plans before?

Mr. BETTENBERG. Yes, we've had annual plans.

GAO TESTIMONY

Mr. YATES. GAO testified before the Interior Committee Associate Director of the Accounting and Financial Management Division on April 28, 1987

Mr. BETTENBERG. I was there.

Mr. YATES. You were there.

A year ago, roughly. All right.

We are pleased to be here today to discuss the Department of the Interior's procedures for collecting and accounting for oil and gas royalties due the federal government, stakes and Indian tribes and allottees.

In the past 30 years, numerous GAO and Department of Interior audit reports and a blue ribbon study commission have addressed the need for Interior to correct the long-standing management problems that have plagued its oil and gas royalty management program. The Congress has also called for improvements during numerous oversight hearings and reports. For instance, a comprehensive report by the House Committee on Interior and Insular Affairs in December 1984 highlighted serious continuing royalty management problems facing the department and presented a series of recommendations to correct those problems.

As a matter of fact, that's the reason for MMS coming into existence. GS had done such a poor job. Then you came into existence, right? When did MMS start?

Mr. BETTENBERG. MMS started in January of 1982.

Mr. YATES. In 1982, by Secretarial Order.

Here we are in 1987, five years after that time. Presumably you have been shaken down by that time. The Department has shaken you down and you've got your ducks in a row.

The department has put forth major efforts-we'll go back to the testimony here over a number of years to improve its performance in this difficult and complex area.

That's what Ms. Fleischman is saying.

However, it continues to experience serious difficulties in the following critical

areas:

Developing and publishing acceptable product valuation guidelines.

Presumably you have just finished that.

Mr. BETTENBERG. We've finished that.

Mr. YATES. Except for coal.

Mr. BETTENBERG. Right.

Mr. YATES. Okay.

Implementing an effective accounting system for royalty collections and distribu

tions.

I don't know that you've done that as yet.

Mr. BETTENBERG. I think that's a two-part problem. We've completed the first part and we're working on the second.

Mr. YATES. Okay.

Verifying production through a viable lease inspection program, and

Mr. BETTENBERG. They are largely addressing the Bureau of Land Management there.

Mr. YATES. Okay.

And then they say this:

Establishing an adequate auditing program to check on the accuracy and completeness of the industry's royalty payments.

As I understand it, that's what Ms. Fleischman wants, too.

Is that what you're aiming at?

Ms. FLEISCHMAN. Yes.

Mr. YATES. It's exactly what you're aiming at.

Ms. FLEISCHMAN. That's the plan as I understand it.

Mr. YATES. That plan is taking on such huge dimensions now. [Laughter.]

Can they do it without the plan?

Ms. FLEISCHMAN. We think that they would more effectively use their resources and more likely would achieve their mission if they had a detailed, specific audit plan to cover the lease universe. Mr. YATES. Now, is that a very difficult thing to do?

MS. FLEISCHMAN. Well-▬

Mr. YATES. Well, it's difficult, isn't it?

Mr. BETTENBERG. It's taken a while, but we agreed to complete it. Mr. YATES. You agreed to do it.

When do you want to do it? By when?

Mr. BETTENBERG. Well, what I said was that there are various pieces to it. The fundamental pieces I think are already in place. Mr. YATES. Then it shouldn't take you very long to complete the thing.

Mr. BETTENBERG. And the other part of it is▬▬

Mr. YATES. Do you want 30 days to complete it? Do you want to talk to your associate on the right there?

Mr. BETTENBERG. I'm trying to avoid

Mr. YATES. I know you are.

Mr. BETTENBERG. Dealing with-

Mr. YATES. I know you are. I know you are, sir.

I'm talking about how you've been trying to avoid the IG's recommendations, too.

Mr. BETTENBERG. No, we agreed with it, and so we're doing it.

INSPECTOR GENERAL'S REQUEST FOR AN AUDIT PLAN

Mr. YATES. No, you haven't agreed with their request for a plan, have you?

Mr. BETTENBERG. Yes, we did. On page 21.

Mr. YATES. So you agreed with the plan. When are you going to give them their plan?

Mr. BETTENBERG. What I said is that there are several parts to it. Mr. YATES. Okay.

Mr. BETTENBERG. Substantial parts of this I think that we have completed now.

They apparently think there ought to be some more narrative with it than what we have. We will probably need to sit down and figure out what they're talking about there.

Mr. YATES. Well, why don't you sit-have you ever talked to Mr. Bettenberg? Has anybody ever talked to Mr. Bettenberg?

Ms. FLEISCHMAN. Yes, frequently.

Mr. YATES. Okay.

Can you sit down with him and work this out, and get your plan, do you think?

Ms. FLEISCHMAN. I certainly hope so.

Mr. YATES. All right. When do you want to do it? When do you want to sit down with her?

Mr. BETTENBERG. I think early next week would be a very good time.

Mr. YATES. Can you do that?

Ms. FLEISCHMAN. I believe so.

Mr. YATES. All right. Would you report back to the Committee on what progress is taking place?

Ms. FLEISCHMAN. Yes, sir, we will.

Mr. YATES. All right. Thank you.

Ms. FLEISCHMAN. Thank you.

Mr. BETTENBERG. I think it would be useful for the record to show that Mr. Simonette in his testimony last year also indicated that we had made tremendous progress.

Mr. YATES. Sure, Mr. Simonette's full statement may go into the record at this point.

[Mr. Simonette's statement follows:]