How to Fail Completely at Audits: Sponsored by the DCAA
Damn, I'm going to get in trouble for covering this for reasons that I can't get into here so let's remind JDA readers of the disclaimer, shall we? Just in case. I'm all about covering my ass, you know, I didn't sail on up the corporate ladder of the accounting fringes for nothing!
Anyway, that disclaimer:
Disclaimer: This blog is the author's opinion and based upon independent analysis of current events as experienced and researched by the author, entirely independent of professional and/or personal affiliations. The author's goal is to educate, not offend, but sometimes you've got to rile people up to get them to pay attention. If you are offended, the plan is working.
None of this should be construed as investment, tax, life, accounting, money, or financial advice. No financially-inclined hipsters were hurt in the writing of this blog
Now, let's get into the chewy nougat center of accounting failure, shall we? Entirely independent of personal and/or professional affiliations, that is.
h/t Going Concern. See? I don't just write over there, I actually read the God damn shit too.
As part of the probe of DOD contracting audit snafus, the GAO reviewed 69 separate audit assignments designed to support contract awards and administrative decisions affecting billions of dollars in Pentagon expenditures.
The problems uncovered by the investigation included waste of time and resources by the audit agency. As an example, the GAO noted that DCAA auditors spent 530 hours to support an audit of the cash management system at a research and development grantee, only to discover that the billing system was non-existent.
During a separate billing system audit of a supplier of combat systems, "Auditors deleted key audit steps related to the contractor policies and internal controls over progress payments without explanation." One DCAA auditor told the GAO he did not perform detailed tests because, "The contractor would not appreciate it."
Even more red flags were raised when a military contractor involved in the Iraq reconstruction project objected to a draft of a DCAA audit report that cited eight significant deficiencies in the firm's accounting system.
In response, "Auditors dropped five significant deficiencies and downgraded three others to suggestions to improve without performing new work," the GAO told Congress.
"The contractor would not appreciate it" huh? Does that actually work? Because the auditors I know would be inclined to say "fuck the client" and that's why no one wants to hang out with them in the first place. It's not about making friends, it's about tracking down the deficiencies and identifying the abuse, right? Or maybe I'm overdue for an audit refresher, it has been several months since I've sat through 24 hours of Audit class.