Your Two Cents on an Independent Audit Agency?

Nick Baumann over at Mother Jones has posted some feedback on the 12 recommendations we recently made to Congress:

My favorite idea of the bunch is probably the second one, an independent audit agency. The great thing about spending more money on auditors is that auditors catch enough waste and fraud that the increased funding tends to pay for itself, plus some. But government auditors are too dependent on the agencies and departments they're supposed to be monitoring.

Since this a relatively new idea for POGO, we wanted to ask our readers — what do you think of this particular recommendation? Here it is again:

2. Create an Independent Audit Agency

Auditors are on the front lines of rooting out wasteful spending in federal agencies. Experience has shown that increased funding for auditors ultimately results in greater savings for taxpayers, making it essential for these offices to have the funding, independence, staffing, and other resources they need to do their job. Unfortunately, investigations into the General Services Administration (GSA), Minerals Management Service (MMS) at the Department of the Interior, and the Defense Contract Audit Agency (DCAA) have found that auditors lack the independence from their agencies they need to effectively do their jobs. As a result, auditors' findings have been ignored or altered, and in some cases have resulted in retaliation or demotion [more on that here and here].

Congress should consider establishing an independent federal contract audit agency. Until then, we hope that Congress provides rigorous oversight to ensure that agency heads allow auditors to operate independently, and warn them that officials who interfere with auditors' independence will be held accountable.

So what would an independent audit agency look like? How else can we ensure that government auditors have independence?

Are there any other ideas on our list that jump out? Do you have a favorite recommendation? What's missing from the list?

-- Bryan Rahija

Comments

[Rich Wilkinson]

In respnse to DEFNS, you've only seen the tip of the iceberg. EVERY service in DOD has its own audit agency. Thers's an Army audit agency, a Navy audit agency, an Air Force audit agency, etc. The point of having an independent audit agency would be to consolidate and eliminate the profileration of audit agencies and activities that exist today.

Use of the central audit agency should NOT be optional. Every Federal contract should be subject to audit by this agency AND NO OTHER.

Let the agencies use their Inspectors General when they need to investigate something within the agency. That's what they're for.

And while we're at it, forbid agencies from maintaining audit staff of their own. We might even see some savings from sheer economies of scale.

[Rich Wilkinson]

I think it's a good idea.

It should be an independent agency repoting directly to the Office of the President (through OMB or OFPP) much as GSA does today. It should be funded (like GSA) by a small percentage off the top of every contract let by every Federal Agency.

The result would be (1) more uniform audit rules and procedures across all agencies, (2) a degree of independence that is desperately needed, and (3) visibility into results of audits that will never happen so long as the agency is within DCAA.

If we're really serious about transparency, we should create an independent audit agency with a charter to PUBLISH THEIR RESULTS and DO IT RIGHT!

By the way, the vast majority of approriated funds obligated by Civilian agencies are already audited by DCAA. They do on a reimpusable basis and spend untold thousands of person-hours calculating how much to charge for their services.

[SoCal Contractor]

meh. I'm not overly enthusiastic. A couple of points to consider:

1. The "savings" that you say "experience has shown" was calculated by the auditors themselves. As such, there is some doubt (in my mind at least) that the numbers might have been inflated in a self-serving attempt to justify to Congress why more funds were needed. In any case, the savings numbers are largely based on draft, unsustained findings, not the final values. Sustention rates are below 50%.

2. The allegation that DCAA audits were improperly affected by other DoD components is largely based on events surrounding a single audit (Boeing, Huntington Beach, CA). The participants in that audit have told conflicting stories and the USAF has disagreed with GAO's characterization (see the DOD IG report). I think the accepted fact that DCAA has trouble issuing high-quality audits, at least in part because of its own management metrics and pressures, is more worthy of being addressed than the perceived "independence" issue. In any case, don't confuse independence under GAGAS with the issue of buying command influence, because they are two different things.

In sum, I would rather see significant reforms undertaken within DCAA than creation of another audit agency that subsumes or supersedes DCAA.

[Dfens]

This is another stupid idea! How many watchdogs do you need? You already have the government contracting agency itself, DCMA, DCAA, GAO, and Congress itself. How many more layers do you want to add to the cake? Remember, every new agency brings it's own burden of bureacracy and costs.

Why don't we adopt a procurement approach that makes sense instead? Why keep paying for failure? Why pay a contractor more when they screw up than we do if they provide a good product on time? Are we a bunch of idiots that we can't figure that one out? Stop paying for failure and pay for results. There. No new bureacracy. Just common sense.

[Ms Sparky]

Interesting idea...hmmmm. Let's not have our own people audit us! Quite novel. I wonder why the Army didn't think of that.

Actually I think it is a good idea if....

1. The independent auditors were given free reign to audit.
2. If the audit findings were actually read and and addressed instead of being disregarded.
3. If the independent auditors were competent. This is a biggy or we will end up with another "Acorn" situation.
4. I like the idea of monetary rewards to the auditors for finding fraud waste and abuse, but I'm afraid they would then only go after the big money issues and leave the huge amount of small fraud issues un-audited.

This independent audit issue has equal potential for both success and dismal failure.

[Mike]

The only way an independence audit agency will work is to make audits mandatory and to have the audit findings be treated as mandatory findings and not just given away as the Army, Air Force, Navy and DCMA have done in the past. The independent agency needs to include all government organizations including the intelligence community.

[Nick]

Bryan,

It's actually not a new idea for POGO at all. Back in 1988, POGO (when it was PMP) recommended an FCAA in the 1988 briefing paper for the upcoming administration.

Nick

[cloud minder]

well- the University of California is going to be audited by the state. The JLAC (a joint house committee) just voted to approve the audit - it is expected to cost $100,000 and take 8-9 months. I wonder if it will be thorough or not- I wonder how much foot dragging UC will engage in -- given their resistance to give whistle blower rights to their employees... so yes it would be great to have an outside agency that is completely objective to do the audit.

[Jack]

How about a Civilian or non-government agency doing the Audits with an incentive established in to their contracts for additional or increased funds for divulging government agency inpropieties? It would provide a little more nudging and less effort to expose the misleading or inappropriate conclusions so often provided by management of said agencies. This is a solution that should be used by Civilian Corporations and Government agencies. Then again, when these audits are requested, do the requestors really want to know the truth? From my experience, I think not.