Senator Charles Grassley (R-IA) issued a "report card" on Monday that provides more evidence that the Pentagon's top watchdog needs to up its game. The report card is a follow-up to his September 2010 oversight review of the Department of Defense Office of Inspector General (DoD OIG) audit efforts. The September 2010 review examined audit efforts from 2009, while this newest report card looks at DoD OIG auditing in 2010. DoD OIG auditing got a D- overall from Grassley.
"Audits are the tip of the inspector general's spear," Grassley said in a press statement. "A good spear always needs a finely honed cutting edge. Right now, the point of that spear is dull. The best audit weapon is disabled. As a watchdog, I get serious heartburn from degraded audit capabilities. It puts the taxpayers' money in harm's way. It leaves huge sums of money vulnerable to theft and waste."
For his part, DoD Inspector General (IG) Gordon Heddell said in a statement sent to POGO, "I agree with Senator Grassley that the DoD IG, 'is capable of producing quality reports' and believe that the quality of our Audit reports is significantly better than what is reflected in his 'Report Card.'"
"I look forward to continuing my efforts to implement the DoD IG Audit transformation plan unveiled in December of last year," Heddell said.
POGO believes that there are problems with the Office of Inspector General's focus. The Grassley report's comparison of the DoD OIG with its counterparts at other agencies builds the case that the DoD OIG could be much more effective. Based on Grassley's report, POGO has concerns with auditor productivity, cost-effectiveness of the DoD OIG overall, the focus of DoD OIG auditing resources, and the average experience levels of DoD OIG auditors. Nonetheless, there are some other factors that Grassley should consider in his next oversight review of the DoD OIG.
Cost impact of each audit report
The comparison of the the average cost of each audit produced by DoD OIG to the average cost other OIGs' audits is powerful; however, it fails to assess the average cost impact of each audit report. While DoD OIG audit reports on average cost more, do they ultimately end up saving more money on average? The DoD IG told POGO that during FY 2010, DoD IG auditors achieved $4.3 billion in monetary benefits—over $6.1 million per employee in the Office of Audit (the auditing component of the OIG)—and another $4.35 billion in potential savings.
Timeliness vs. thoroughness?
The overall grades for all the audit reports Grassley reviewed are seriously dragged down by bad grades for lack of timeliness. For many of the so-called "good" audits that would have otherwise received an A or B, they received a B- or C because the Inspector General took a long period of time to complete them. But without more information, it's hard to know if there are justifiable reasons for why it took so long for the DoD OIG to complete the reports. It may be that these reports were so substantively successful because of the time it took to finish them. On the flipside, it may be that DoD OIG auditing resources are not adequately and effectively focused on the right things at the right time, or that there is excessive management review. But on that note, the DoD OIG has also rescinded two reports in recent years because of problems with documentation of report findings and questions about the sufficiency of management review of those reports before they were completed (here's the backstory on one of these reports—note: for this report, Inspector General Heddell was not the DoD IG at the time of its issuance).
The value of some policy-oriented audits
Also, Grassley takes issue with many of the policy-oriented DoD IG audit reports that rarely save little, if any, money directly (although they may strengthen policy compliance, which could save money), a concern that POGO shares. But, to be clear, we also think policy-oriented audit reports sometimes are highly valuable and at times, are even more important than waste, fraud, and abuse-style reports (also, depends on how you define "abuse"—abuse sometimes means policy noncompliance). Take, for instance, the Justice Department OIG's work on reviewing the use of the Patriot Act.
Reports mandated by Congress
Furthermore, Grassley does not dwell on the fact that many DoD OIG audit reports are required by law. Congress passes these laws. The DoD IG has no discretion when it comes to doing these reports when it is mandated by law that they do them. The 27 Recovery Act reports that Grassley mentions, which he calls the "worst-of-the-worst," fall in this category. For a fair critique of what the DoD OIG does, Grassley needs to focus some of his firepower on how Congress mandates the use of the DoD OIG's audit resources.
All of this isn't to say that there are no problems at the DoD OIG, but the diagnosis still needs some more work. The key is we have to avoid assessing the success or failure of IGs in narrow ways that might not capture the complexity of their mission and their oversight efforts.
Nick Schwellenbach is POGO's Director of Investigations.