It appears that the Defense Department’s flagship accounting agency, the Defense Finance and Accounting Service (DFAS), is suffering its own audit woes, despite receiving clean bills of health on its own financial statements from an outside qualified government auditor.
Adding insult to injury, the Office of the Inspector General (IG), an office that is supposed to be independent and tasked with conducting oversight of the Defense Department and the agencies within the department, seems to have turned a blind eye to the problems within the Defense Finance and Accounting Service. It looks like the IG buckled under pressure from the DFAS when attempting to conduct oversight of the troubled agency’s financial statements. Because of all the bungling and ethical missteps on these audits, the independence and integrity of the Inspector General’s audit process may have been compromised.
It came to my attention in April 2012, when I began receiving allegations of misconduct regarding the Defense Finance and Accounting Service opinion audits. My office then initiated a review of official records of those audits with the guidance of Certified Public Accounting-qualified government auditors. My findings are outlined in a letter and staff oversight report that I forwarded on Nov. 22 to both Secretary of Defense Chuck Hagel and Defense Department Inspector General Jon Rymer.
Discoveries in documents, when coupled with verbal and written interviews of knowledgeable officials, tell the story of what really happened. And it’s not a pretty picture. If this snapshot is characteristic of the work being produced by that office, we have a problem.
Audits are a primary oversight tool for rooting out fraud and waste in the government. To protect taxpayers, these government audits must be as good as they can be. Effective audit reporting is the key to pinpointing long-standing accounting deficiencies that allow waste and theft to go undetected and unchecked. Hard-hitting audits should help senior management apply mandated cuts where they are needed most. But, as long as the Inspector General’s audit shop, the main check on DFAS, remains weak and ineffective, the probability of rooting out much fraud and waste during spending cuts under sequestration is very low.
As a result of the Inspector General Office’s turning its head, instead of helping to identify places to save money, it looks like the Defense Finance and Accounting Service may be free and clear in trying to hide its own problems by pretending its books are in order and then running roughshod over anybody who dares to question its “clean” audit.
Click here to see a summary of the findings and recommendations in the staff oversight report. Click here to see the report.
Click here to read a news story written by McClatchy reporters Jim Rosen and Marisa Taylor about my report and the problems within the Defense Finance and Accounting Service: http://www.mcclatchydc.com/2013/11/22/209356/pentagons-bosses-thwart-accurate.html