The Inspector General Function and Outsourcing: An Introduction

AuthorDavid M. Shapiro
DOIhttp://doi.org/10.1002/jcaf.22238
Published date01 January 2017
Date01 January 2017
81
© 2017 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI 10.1002/jcaf.22238
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The Inspector General Function
and Outsourcing: An Introduction
David M. Shapiro
INTRODUCTION
The independent
private-sector inspec-
tor general (IPSIG) is
a private-sector entity
that has legal, audit-
ing, investigative,
management, and
supporting (cogni-
tive) skills to perform
an independent com-
pliance role, includ-
ing inspector and
oversight activities
arising from legal and
regulatory concerns.
Its function is derived
from the Inspec-
tor General Act of
1978. Structurally,
the concept of orga-
nizational indepen-
dence has been key to
imparting credibility
to the Office of the
Inspector General
(OIG) or IPSIG find-
ings. Under federal
laws, the federal
OIG is defined as
a separate agency
in relation to the
established federal
agency that the OIG
inspects and over-
sees. (See 5a U.S.C.
Section 6(d)(1)(A)
(i).) The fundamental
concept—inspection
and oversight (IO)—
has long-standing
acceptance in many
public- and private-
sector contexts in the
United States and
elsewhere. Its appli-
cation is varied.
This exploratory
article examines
whether it likely mat-
ters where the OIG
is placed organiza-
tionally (i.e., inside
or outside the public
sector) in support
of the IO function.
Important consid-
erations include
confidentiality of
investigations and
audits; effects on
stakeholders; the
procurement process
by which private-
sector IGs would
be selected, evalu-
ated, and trained;
In light of the apparent lack of success of one-
size-fits-all approaches to process improvement
generally and the importance of localized condi-
tions to problem solving, the inspector general (IG)
function may conceivably be performed, entirely
or in part, by the private sector without any clearly
obvious detriments in fact; that is, particular
circumstances may support the IG as a private-
sector outsourced inspection and oversight unit.
As public-sector budgets become strained and
the significance of the independent (not-for-profit)
sector gains in prominence and influence, the role
of the IG may be redesigned and reimplemented
as a function within the independent/private sec-
tor, separate and apart from the agency under its
inspection and oversight responsibilities. Thus, it
would be directly subject to the demands and con-
straints commonly applied to the private sector,
including performance measures such as profit-
ability, maintenance of adequate capital reserves,
and so on. The relationships among the public, pri-
vate, and independent sectors, including analysis
of the effectiveness of financial and performance
standards, as well as potential effects on the IG
unit of obligations to stakeholders distinct from
the current mix of stakeholders in the provision of
public-sector service such as private sharehold-
ers, will form part of this discussion.
© 2017 Wiley Periodicals, Inc.
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