Differentiating Management and Leadership

Management and Leadership



Under the Inspector General’s Act of 1978, the Executive Branch of the United States government maintains offices of inspectors general within U.S. government agencies, to oversee compliance with federal laws, rules and regulations (Nowalinski 2001). The U.S. Department of Health and Human Services (DHHS) is the largest of all federal agencies, accounting for approximately one quarter of the total annual budget for federal agency administration (HHSOIG 2008).

The DHHS Office of Inspector General (OIG) maintains a headquarters in Washington, DC, under the direction of the Inspector General and eight regional offices throughout the U.S. which oversee, investigate, and enforce compliance with all federal requirements in connection with DHHS programs in all 50 states and the Puerto Rican Commonwealth. The primary investigative focus of HHS-OIG is compliance, inspection, and financial monitoring of HHS-administered entities and of HHS fund recipients achieved through audits conducted by federal auditors employed by the OIG. Within each regional HHS-OIG office, the Office of Audit Services (OAS) initiates audits of facilities and programs under HHS authority, conducted by audit teams comprising senior lead auditors and approximately 3 to 10 auditors, depending on the size of the organization or program under scrutiny and the complexity of the audit. Each HHS-OIG-OAS audit team reports to an audit manager within the regional office, all of whom report directly to the Regional Inspector General (RIG) who directs the operations of the regional office and any regional field offices. Generally, each regional field office maintains approximately five audit managers, each of whom supervisors from one to four audit teams, each ranging in size from a few auditors to approximately 10. (HHS-OIG 2008).

Differentiating Management and Leadership:

Management and leadership functions are clearly defined within the OAS. Annual audit plans are determined by the eight RIGs pursuant to instructions issued from the Inspector General (IG) in Washington, after incorporating input received from the RIGs and from external sources. Under the annual audit plan, each regional office is responsible for audits planned within states located in its region, and each audit manager takes responsibility for specific audits. Audit managers, in turn, assign audits to individual audit teams.

Once audit teams receive their planned audit schedule, each team meets with its audit manager who explains the anticipated audit issues and areas of inquiry; the audit manager may also meet periodically with the lead auditors in addition to comprehensive team meetings. During audits, the lead auditor assists less senior auditors in the performance of their assignments and maintains communication with the audit manager to review operational details as well as preliminary findings and any difficulties or other issues that arise in the course of the audit.

Upon completion of the audit, the audit team assembles a meeting to brief the audit manager of preliminary findings and any issues disclosed, and the audit manager directs the manner in which those findings must subsequently be analyzed, confirmed, and then reported to the RIG in a formal executive audit report. Each auditor is responsible for drafting a portion of the audit report corresponding to his specific areas of inquiry during the audit and consults either senior auditors, the lead auditor, or the audit manager for any necessary assistance.

After all the component parts of the audit report is in draft form, the audit manager reviews and edits the entire report and then submits it for the review of the RIG.

The RIG may suggest changes and identify any problems in the audit report, which are then addressed by the audit manager and any portion of the audit team responsible for those portions of the report. Draft reports of regional audits are issued by the RIG, while national draft reports are submitted by the RIG to the Inspector General in Washington, who may initiate subsequent cycles of review and editing with the regional office before issuing the draft audit report to the audited entity, program or individual (“auditee”) audited for comments and response to the issues reported and recommendations suggested by the audit report.

The RIG engages in formal communications with the auditee and may revise findings or recommendations based on additional information or clarification provided by the auditee. Once this phase is complete, the RIG (or IG, as the case may be), issues the final audit report to the auditee as well as publishing the report in the formal HHS-OIG records and HHS public website. The recommendations of all HHS-OIG reports carry the weight of federal law and are enforceable by the OIG Office of Investigations, the enforcement arm of each federal agency OIG.

The Four Functions of Management in Creating and Maintaining a Healthy Organizational Culture:

Within the OAS, audit managers fill the primary roles and maintain the responsibilities of organizational management and leadership. In that capacity, they meet regularly with the RIG to identify and plan potential issues for future audits, in connection with which they consider the potential scope of each issue and the relative priority and importance of those issues in relation to other potential audit issues.

Since any agency as large as HHS administrates hundreds of different federal programs, the number of conceivable audit issues is far greater than could ever be addressed formally. Consequently, audit managers, RIGs, and the IG must identify and plan the most productive, effective, and appropriate allocation of agency funds and resources by selecting the audits with the greatest relevance to health, safety, and human welfare, and those representing the largest sums of federal dollars subject to potential recovery. The planning function of management occurs in multiple stages in that areas of inquiry are first considered by the IG with input from the eight RIGs; thereafter, the scheduled audits undergo operational planning between the individual RIGs and the regional managers.

After the annual audit plan is established within each region, the RIGs and regional managers organize the operational elements of audits by allocating and configuring the resources available, both in terms of budget and personnel. This oversight continues through regular meetings between the RIGs and audit managers throughout the annual audit cycle (and sometimes throughout each ongoing audit), wherever subsequent reevaluation, adjustment, or reallocation of resources or changes in operational procedures become necessary. Sometimes, audits undergo significant changes in their objectives and areas of inquiry, based on preliminary findings that suggest alternate directions that better achieve the goals of enforcing compliance of important issues or recovering the greatest amount of federal funds possible. Occasionally, preliminary findings generate results that cause the planned audit to be terminated altogether to conserve resources applicable to more important audits with greater likelihood of return on the resource investment.

From the inception of each audit to its conclusion and the issuance of a final report, the audit managers provide operational leadership and maintain responsibility for ensuring that audit teams comply with strict procedural rules for government audits as well as for providing necessary assistance with any issues or problems encountered by auditors during their audits.

Throughout the agency, the OIG promotes a culture of mutual respect, professionalism, and trust through periodic training in specific audit tasks, as well, either through on-site training programs or the occasional working retreats that include team- building exercises in an informal environment. The aim of these investments is to generate the highest possible level of mutual respect and team unity in recognition that the highly compartmentalized technical tasks of auditing does not necessarily lend itself to the natural establishment of strong social bonds, particularly among individuals working in different teams for long periods of time.

The second way that the OAS attempts to maintain the healthiest possible organizational culture is by periodic recognition and awards for superior performance, both of audit teams and of individual auditors. Since substantial monetary rewards and bonuses commonly used to inspire productivity in the private sector is not authorized for federal employees, the peer recognition is one of the most important motivators of morale and performance available in government service (Kinicki 2005).

Generally, it is the responsibility of audit managers to nominate auditors from their audit teams for special recognition to the RIG and to the IG. While monetary rewards available under federal law are not comparable to those available in the private sector, recent legislative changes in federal policies and pay have authorized the allocation of modest salary increases (when available from the agency budget), based on superior performance. Under formal position description maintained by the Executive Secretary, no designation exists within the OAS of “supervisory auditor” despite the significant difference in experience, expertise, and seniority of the auditors employed by the agency.

Generally, each audit team is composed of at least one senior auditor whose General Services (GS) pay grade is 13, one level below the managerial grade (GS-14). The rest of each audit team usually consists of auditors ranging from those with no prior experience who enter federal service as the GS-7 or GS-9 level, to those at the GS-11 or GS-12 level, in addition to the senior (GS-13) auditor (HHS 2008).

Most audit managers assign supervisory tasks to senior auditors and, in general, consistently encourage more senior auditors to fulfill a mentor role within the audit team.

The dual benefit of this practice is that it fosters greater team unity and a healthier organizational culture, in addition to enabling junior auditors to learn technical skills from their more senior associates. Very often, the types of relationships maintained by senior auditors within their audit teams is one of the most important criteria considered in conjunction with possible recommendations for future promotion of senior (GS-13) auditors to management at the GS-14 level. By the time auditors reach the GS-13 level, they are not readily distinguishable from one another in technical skill (or they would not have risen above the GS-12 level).

Therefore, it is precisely their performance in the unofficial role of “supervisory” auditor that is most often considered the difference between auditors capable of perpetuating the healthy organizational culture of the agency as managers and those who are appreciated for their hard work, but not necessarily in the context of promotional potential to management.


Kinicki, a., Williams, B. (2005) Management: A Practical Approach. New York: McGraw-Hill.

Nowalinski, G. (2001) a Brief History of the HHS Office of Inspector General USDHHS Office of Inspections and Evaluations. Washington, DC: GAO

U.S. Health and Human Services Office of Inspector General Public Website, Retrieved March 24, 2008, at http://oig.hhs.gov/organization/OAS/index.html

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