Auditing the Auditors - A "Junk-Yard Dog" Index

Senator Grassley issued his second report card in two years on audit reports issued by the DoD Inspector General's Office during fiscal year 2010. Overall, he gave the organization a "D-" for its work.

His first report card, issued in 2010, showed that audit oversight capabilities, which cost taxpayers $100 million every year, were seriously degraded, leaving taxpayers' money vulnerable to fraud, waste, and outright theft. This year's card showed little, if any, improvement.

In the most recent report card, reports were reviewed, evaluated and graded using five rating categories:

1. Relevance - Were audit objectives fully aligned with the core IG mission - to detect, report, and deter fraud, waste, theft, illegal and improper activities, and abuse and misuse of the taxpayer's money?
2. Connecting the dots on the money trail - Did the audit connect all the dots in the cycle of transactions? Did the audit examine, match and verify all pertinent transaction data from contract requirements through actual payments? Did it determine whether the government received what it ordered at the agreed upon price and schedule?
3. Strength and accuracy of recommendations - Were the findings consistent with the evidence developed in the audit? Were the recommendations tough and appropriate? Were officials who were responsible for alleged fraud, waste and mismanagement held accountable through recommendations for administrative action or criminal investigations? Did the audit recommend steps be taken to recover fraudulent, unauthorized, erroneous or improper payments?
4. Fraud and waste meter - Did the audit carefully document the exact dollar amounts of alleged fraudulent, wasteful, unauthorized or improper payments and verify those dollar amounts at primary sources?
5. Timeliness - How quickly was the report issued? Did it take 6 months or a year or more to publish? Or did it take so long to complete that its findings and recommendations became stale or irrelevant?
6. Junk-yard dog index - This is the sum of grades awarded in each of the five above-mentioned rating categories divided by five for the overall average for the report.

The DoD-IG scored an "F" in Strength and Accuracy of Recommendations and Fraud and Waste Meter. The other three factors were "D+", "D", and "D-". "Instead of being hard-core, fraud-busting contract or financial audits, most reports were policy and compliance reviews with zero fiscal impact. Some of this work might have been more appropriately performed as DoD staff or think tank studies rather than as independent audits".

The audits cost an average of $800 thousand each, taking seven auditors an entire year to complete. That is actually stunning information - it would be difficult to imagine that a private firm could stay in business with such low productivity.