A report by Senator Charles Grassley, R-Iowa, a self-proclaimed government waste watchdog, blasts the Defense Department’s chief auditor, criticizing the department’s oversight of defense contracts and spending. The role of the Inspector General is to initiate audits and investigations into the programs and operations of DoD, including defense contracting.
The report card on FY 2010 audits summarizes 113 reviews of unclassified Defense inspector general (IG) general audits by Grassley’s staff from fiscal 2010. Only 15 reports – or 13.3% – were found to be “good to very good”, with five reports getting it “mostly right” and 10 reports being “partially right”. Those receiving higher rankings were said to have provided some of the kind of “aggressive” auditing and analysis needed on high-dollar weapons system and support contracts.
“The audit is the tip of the inspector general spear and it needs to have a finely honed cutting edge,” said Grassley in the report. “Right now, it is disabled… Until the Audit Office regains its edge and audit quality improves, its subpar work will continue to fail the taxpayers and DOD clients.”
The grading criteria were based on five questions: whether the audits were aligned with the core IG mission; did they “connect all the dots in the transactions from contract to payments;” were the findings consistent with the evidence developed in the audit; did the audit carefully document the cost of alleged fraudulent, wasteful, unauthorized or improper payments and verify those amounts; and whether they were completed in a timely manner.
The IG report Grassley assigned the lowest score is “Defense Contract Management Agency Acquisition Workforce for Southwest Asia,” which received an F score in every category across-the-board. The highest grade was awarded to the audit titled “Foreign Allowances and Differentials Paid to DoD Civilian Employees Supporting Overseas Contingency Operations.”
Grassley’s report lists nine “audit roadblocks” that stand between “lackluster audits and quality audits.” The recommendations include less focus on policy compliance and more on financial benefits to taxpayer; staying “on the money trail” detecting waste and fraud 24 hours a day; strengthening IG recommendations; greater follow-up on audits in terms of recovering stolen money and holding officials accountable; and revamping the Defense Department accounting system. The report notes the need to ensure that contract deliverables actual meet the requirements.
“Since DOD’s broken accounting system is obstructing the audit process, contracts designed to fix that system need to be assigned a much higher audit priority,” the report stated.
The report also stated that until the DOD accounting system is fixed, genuine contract and financial audits will require large audits teams if such reports are to be completed within a reasonable length of time.