The Department of Defense Inspector General(DOD IG) issued a March 7, 2013 report charging that the Defense Contract Audit Agency (DCAA) failed to “exercise sufficient professional judgment” while performing certain audits between 2006 and 2010 signaling another bump in the long road ahead for the Agency's return to compliance with GAGAS.
The DCAA Director, Patrick Fitzgerald and Pentagon Comptroller Robert Hale were caught off guard by the report, since the IG reported findings are based on testing of two to three year old audit file data for fifty DCAA reports issued between October 2009 and March 2010. The extensive time span between the period during which IG tested adherence to professional standards and the release of the 2013 report (two to three years) renders the IG findings and recommendations outdated and therefore of little value to DOD since the IG report does not consider DCAA corrective action implemented over the past two or three years.
The IG’s report identifies instances of DCAA audit judgment issues to include independence impairments; insufficient communication with audit requester and contractor personnel; inadequate audit file documentation to support significant judgments and conclusions; poorly trained and/or inexperienced auditors undertaking assignments above their level of competence; unsupported or untimely reports; insufficient contractor evidential data reviewed to support conclusions, and; ineffective supervision and quality control.
The problem with the IG report is that since the data tested, supporting the IG’s conclusions, is not current in relation to the time the report is released, the outdated data reviewed is not sufficient to support those findings, hence a GAGAS circumvention. This standard of matching currency of data tested to close proximity of the report date is one that DOD IG has affirmed in a prior IG report (September 2011) regarding DCAA’s lack of currency in data tested. Thus the IG’s issuance of its current reported findings based on data outdated by three years is nothing short of the frog (IG) calling the toad (DCAA) ugly.