44:0717(57)RP - - Navy, Naval Audit Service, SE Region and NFFE - - 1992 FLRAdec RP - - v44 p717

[ v44 p717 ]
The decision of the Authority follows:

44 FLRA No. 57









(Labor Organization/Petitioner)



March 27, 1992

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This case is before the Authority on an application for review filed by the Petitioner (the Union) under section 2422.17(a) of the Authority's Rules and Regulations. In his Decision and Order, the Regional Director dismissed the Union's petition seeking to represent a regional unit of approximately 72 auditors because he found that section 7112(b)(7) of the Statute precludes a finding that the unit sought is appropriate. The Union seeks review of the Regional Director's Decision and Order dismissing the Union's petition. The Activity filed an opposition to the Union's application for review.(1)

For the reasons discussed below, we find that the Union has established that compelling reasons exist for granting the application for review pursuant to the provisions of section 2422.17 of the Authority's Rules and Regulations. Accordingly, we grant the application for review.

II. Background and Regional Director's Decision

The Union filed a petition seeking to represent a unit of approximately 72 GS-511 auditors at the Activity's Southeast Region. The Union contended that the proposed unit of auditors constituted a distinct group of employees who share a clear and identifiable community of interest. The Activity objected to the proposed unit on the grounds that: (1) the employees are exempt from inclusion in any bargaining unit under section 7112(b)(7) of the Statute because their duties directly affect the internal security of the Activity;(2) and (2) the proposed regional unit is inappropriate because these employees do not possess a community of interest separate and distinct from other Naval Audit Service (NAS) employees across the country and the proposed unit would not promote the efficiency of Agency operations.

According to the Regional Director, the auditors conduct internal audits that involve: (1) evaluating and making recommendations concerning the integrity and reliability of financial and other data used to make management decisions; (2) determining the adequacy of policies and procedures affecting the expenditure of funds, safeguarding and determining the efficient use of resources, and the achievement of management objectives and program results; and (3) determining the extent of compliance with applicable policies, procedures, laws, and regulations.

The Activity is part of the NAS, which is the internal audit organization within the Department of the Navy (Navy) and is under the direction of the Auditor General of the Navy. The Auditor General develops and implements Navy audit standards, policies and procedures consistent with the guidance of the Inspector General, Department of Defense.

The Naval Inspector General inspects, investigates, or inquires into matters of importance concerning fraud, waste, inefficiency, and related improprieties throughout the Navy. However, the Regional Director found that the internal audit function performed by the auditors "serves a primary role of preventing and detecting fraud and illegal acts." Regional Director's Decision at 3. The Regional Director found, in this regard, that the auditors are required to submit copies of all procurement-related fraud reports and standards of conduct reports to the Naval Inspector General. In addition, the Regional Director found that in cases of suspected criminal activity, the auditors are required to submit a written report of suspected fraud to the Naval Investigative Service Command (NISC) with a copy to the activity's commanding officer or the immediate superior in command when the commanding officer may be involved. According to the Regional Director, where such criminal activity is suspected during the audit, notification and dissemination of the auditors' reports are coordinated with the NISC in order to preclude compromise of the investigation or destruction and/or alteration of the evidence.

The Regional Director found that auditors also are responsible for identifying indicators of fraud sufficient to warrant recommending an investigation. The Regional Director noted that the NAS may use investigators from the NISC on selected audits of areas susceptible to fraudulent activities, such as procurement, and found that auditors assist the NISC in documenting fraud.

Citing U.S. Department of Labor, Office of Inspector General, Region I, Boston, Massachusetts, 7 FLRA 834 (1982) (Department of Labor) and U.S. Small Business Administration, 34 FLRA 392 (1990), the Regional Director concluded that the auditors "are engaged in investigation and audit functions relating to the work of individuals employed by the Navy, and that such functions are encompassed within the meaning of the section 7112(b)(7) exclusion set forth in the Statute." Id. at 4. Specifically, the Regional Director found, based on the evidence in the record, that "the claimed auditors are primarily responsible for the conduct of audits of Department of the Navy programs, contracts, and operations." Id. at 5. The Regional Director noted, however, that although the audits concern agency programs, "they necessarily include auditing the individuals who operate these programs." Id. The Regional Director concluded, therefore, that "the potential always exists that a particular audit may result in an investigation of Activity employees concerning fraud, misuse of funds, or malfeasance." Id.

The Regional Director also found that, in the course of conducting audit functions related to matters external to the Navy, an investigation of Navy employees may result. The Regional Director noted, for example, that an auditor's advisory report concerning competition for aircraft wing work revealed a violation of Federal law involving an employee who alle