We stated in a recent article discussing the federal Office of Research Integrity (ORI) that, were they to actually act as a real audit entity, then their also acting as a consulting function for the same institutions could produce a conflict of interest (COI). (“The Essential Need for Research Misconduct Allegation Audits”, Science and Engineering Ethics August 2016, Volume 22, Issue 4, pp 1027–1049; the “allegation audit” article).
Indeed, it seems apparent that ORI’s investigative abilities were severely crippled by HHS regulations in 2000 in favor of its educational/consulting functions. So in the case of ORI, there was, in effect, an actual conflict, and the investigative function lost.
We suggested that ORI investigation and audit oversight should be completely separated from its education division. In part, we based our recommendation on both GAGAS principles and the example of SOX.
First, it should be noted that there is nothing unusual with internal audit acting to consult for management and the board of directors, or others within their own entity (ultimately shareholders). It is, for example, what is done during an operational audit.
SOX applies to external audit. It was external audit firms that lost the ability by U.S. federal law to also consult for those they were auditing. The question is, should government oversight agencies be more like external auditor than internal ones?
Clearly, we considered the ORI and the HHS OIG, as well as other federal OIGs responsible for research oversight, to have audit responsibilities. In particular, that included for audit of the handling of research misconduct allegations, even though it is not clear that any federal agency does an adequate audit by GAGAS (which are the federal audit standards). This was a major point of our article.
We will argue here that the investigative and audit functions of the ORI and federal OIGs actually require even more independence from the institutions being overseen than what SOX requires of external audit firms.
One basis of such an argument would be that public corporations are handling, to a great extent, private money, i.e. that of its investor-shareholders. The threat to the public derives from the importance of public corporate investment through the stock markets in general.
In contrast, U.S. research institutions are in very large part funded by taxpayers. So it is a significant public funding of these institutions that requires oversight. As we noted in our article, one of the important foundations of generally accepted government audit standards is independence. (What we like to call the “I” word.)
Right away, we can see that former ORI Director Wright was probably correct in his concern that having ORI in a political environment like OASH was a potentially serious problem. (Kaiser, J. (2014). Top U.S. Scientific Misconduct Official Quits in Frustration With Bureaucracy. Science Insider, Science Magazine, March 12, 2014.) The presence of a federal oversight function in a department that can be lobbied by those overseen, such as the research institutions, certainly diminishes independence.
We made two points about this situation in our allegation audit article. First, federal OIGs have more independence than an agency like ORI, since the OIGs also report to Congress, and not just their department heads. If IGs only responded to their department heads, as ORI does, it could allow them to more easily become “captured”, which we believe is the Washington, D.C. term of art for those regulatory agencies that become dominated by the interests of those they purportedly oversee. In other words, the oversight agency comes to primarily address the interests of the regulated over the interests of the public. Such a conflict of interest could lead to corrupt actions, e.g. not doing the duties that would be required to protect the public’s interests. ORI’s loss of its ability to do direct investigations is, we believe, a real-life example of a negative outcome on a captured agency.
The second point we made was meant to be an improvement over simply relying on OIGs. After all, there is only so much independence that can be achieved in federal oversight through use of OIGs. We proposed that in addition to the use of OIGs to oversee handling of research misconduct, that third party auditors also be used.
That said, it could be noted that government oversight does not involve risks to direct, legitimate payments. To the extent that such audit functions are funded by public moneys and not those of the institutions overseen, then education and training by the public auditors of such institutions would be less of a potential COI.
However, as we suggested in our article, in theory it could still present a COI because the education division might be induced to lobby the investigative oversight division on behalf of institutions it felt were training well. As we pointed out, this reduces independence according to GAGAS standards – were ORI even to follow such as they should but do not.
In practice, however, the institutions, or their individual scientist faculty, probably did the lobbying of HHS to diminish the power of ORI’s investigative division.
Here is the important point: had there been no education division, the very serious crippling of ORI’s investigative abilities would not likely have happened, or would have produced a much greater outcry than it did. Instead, most everyone missed the crippling of the already not-so-strong ORI, we believe in large part because ORI was seen as doing something else as well – being an educator. That is what we would call an indirect or insidious COI. The attacker uses one division as a foil to cripple the other.
In other words, if the investigation division had been moved to HHS OIG, as we proposed, then it seems unlikely that the political management of HHS would have so easily succeeded in crippling its scientific fraud investigative powers – which, by the way, would then also have been enhanced to the law enforcement (LE) levels of the IGs.