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Why GAGAS Should Make You Gag

bob7947

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For those of you who are not familiar with the auditing world, GAGAS is the acronym for Generally Accepted Government Auditing Standards and it is written and maintained by the Government Accountability Office (GAO). Compliance with GAGAS is mandatory for an auditor during the conduct of an audit and a memo noting compliance with GAGAS should be in the auditor's assignment folder for each audit.

Although I was a member of the auditing community during my career with the GAO, I also viewed myself as a member of the contracting community, As an auditor, I too was bound by GAGAS and I satisfied all of the training necessary to be a professional auditor. As a member of the contracting community, I reviewed thousands of contract files at contracting offices throughout the United States. In addition, I gained an MS in Procurement Management and I wrote GAO's contracting course which I specifically designed for auditors.

Before you think I'm a braggart of some sort, let me explain that I never awarded a federal contract, never wrote a justification and approval, never wrote a determination and findings, never wrote a negotiator's memorandum, etc. I never was a contract specialist and I don't think any auditor should have been one. My interest as an auditor was in how contracting should be done; not how it was being done. There could be a big difference between the two. But enough of this. Why am I writing this entry?

GAGAS CAN BE A SHAM

Recently, I read one of the worst pieces of garbage issued by an auditing activity in my lifetime. It was so pathetically awful that I couldn't read the report. It was page after page of unintelligible gibberish. That brought me back to a longstanding problem I have with GAGAS. It is why GAGAS should make you gag. GAGAS includes things that an auditor should possess for an audit. Below, is an excerpt from GAGAS on an auditor's Competence at section 3.69. I bolded and italicized the word collectively.

The staff assigned to perform the audit must collectively possess adequate professional competence needed to address the audit objectives and perform the work in accordance with GAGAS.

If an auditor does an audit on contracting, must the individual auditor know something about contracting? Simple answer. No! Let's dive a little deeper into the area covering an auditor's Technical Knowledge at section 3.72.

The staff assigned to conduct an audit in accordance with GAGAS should collectively possess the technical knowledge, skills, and experience necessary to be competent for the type of work being performed before beginning work on that audit. The staff assigned to a GAGAS audit should collectively possess . . .

c. skills to communicate clearly and effectively, both orally and in writing; and . . . .

Let's ask another question. If an auditor does an audit on contracting, must the individual auditor know what the auditor is talking about? Simple answer. No!

Go back and look at the two quotes. Notice how I highlighted the word "collectively." Collectively is an agency's way out. The staff assigned to an audit might include an attorney assigned to review the draft audit report once the audit is finished. Maybe, the attorney has some familiarity with contracting but the attorney will not be involved in doing the work. Perhaps, the staff assigned to an audit has an advisor who is knowledgeable but that advisor has no real authority over the conduct of the audit. I served as such an advisor. So much for "collectively possess." GAGAS can be a sham.

Over the years, I listened to agency officials' stories about ignorant auditors who would review their contracts. One of my favorites was the auditor who asked the contracting officer to point out the solicitation for him in the contract file. I wonder what the auditor was going to do with it when he was shown which document it was. You may have had your own unfortunate experiences.

During one of the final audits that I performed, I had contract files stacked in an agency conference room. From time to time, contract specialists would stop in the conference room and talk to me and we would discuss contracting issues. Towards the end of my stay in that conference room, an experienced contracting officer stopped in to see the anomaly--an auditor who could talk intelligently about contracting. I was proud of that. It let that contracting officer and other contract specialists know that I, as a reviewer of their work, took the time in my life to become familiar with the subject matter of their careers.

If the current version of GAGAS ensures an auditor's technical competence, why are there so many horror stories about auditors contracting ignorance? Why was I viewed as the anomaly during my entire career? The honest answer is that GAGAS, as it is currently written, does not ensure an auditor's technical competence in the field of contracting. That's it!

GAGAS CAN BE REVISED EASILY

Now for my suggestion. GAO should rewrite GAGAS's section 3.69 on Competence as I describe below.

The auditor-in-charge of the audit must possess adequate professional competence needed to address the audit objectives and perform the work in accordance with GAGAS.

GAO should rewrite GAGAS section 3.72 on Technical Knowledge as I describe below.

The auditor-in-charge of conducting the audit in accordance with GAGAS should possess the technical knowledge, skills, and experience necessary to be competent for the type of work being performed before beginning work on that audit. The auditor in charge of a GAGAS audit should possess . . .

c. skills to communicate clearly and effectively, both orally and in writing; and . . . .

My suggestion places responsibility for Competence and Technical Knowledge in one individual--the person who directs the audit. Normally, that person is called an auditor-in-charge or something similar. This can easily be done for contracting audits. For example, I was responsible for the conduct of an audit that included 17 subordinate auditors who had no experience with contracts. The work was done at several agencies and several sites around the country. To do the audit, I brought all members of the team to Washington, D. C. and trained them specifically for the work to be done. By the time we were done with the training, my staff knew what to look for and what the documents would look like. They had no trouble identifying problems and documents. As my staff performed their work, I visited with each of them, reviewed their workpapers, and reviewed the contract files, if it was necessary. Throughout the audit, I was available to assist and answer contracting questions. The audit was successful and it had an effect on the way you do contracting.

More and more, an ignorant Congress depends on what auditors report as contracting findings and recommendations. As a result, the work of ignorant auditors can affect contracting careers and contracting laws. Additionally, when an agency sends an ignorant auditor out to identify contracting problems the ignorant auditor doesn't know what to look for and couldn't identify the problem if it him him/her.

MORE SUGGESTIONS

In addition to GAO making the changes I noted to GAGAS, I suggest that agencies that conduct audits

identify auditors who have an interest in contracting and provide the technical training and knowledge they will need as they become auditors-in-charge on contracting audits.

require officials signing an audit to identify the auditor-in-charge on the signature page and certify that the auditor complies with the revised version of GAGAS's Competence and Technical Competence standards.

Further, I suggest that contracting agencies who are the subject of an audit require

their procurement executive or designee to request proof of auditor compliance with GAGAS sections 3.69 and 3.72.

officials that comment on the draft audit report to note any auditor non-compliance with GAGAS sections 3.69 and 3.72 in their comment letter.




5 Comments


No. It has been a problem for decades.

In addition to my suggestions for auditing activities, I may add the following.

At the entrance conference for any audit, the contracting agency's procurement executive or designee should request proof of auditor compliance with the GAGAS sections 3.69 and 3.72.

In the contracting agency's comment letter to the draft report, the contracting agency should note any auditor non-compliance with GAGAS sections 3.69 and 3.72.

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Bob,

What's your opinion of Procurement Management Reviews that are typically done by contract specialists? The team members are not trained auditors. Shouldn't there be someone on the team with audit expertise? How much credence should we have in reports of PMR teams?

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Don:

PMRs of agency contracting functions are done by agency contracting personnel, contractor personnel, national association personnel, etc. I was part of a contractor team doing a PMR type review when I initially retired. If you look at the DCMA item I posted to the home page within the past few days, you will see that the work is done over about a 2-week period. You need members that are experienced with contracting to do that work quickly with any depth.

Some agencies have PMR manuals providing work guidelines and checklists. For me, the key is the PMR Leader and how he/she directs the tone of work and how it is to be done.

I don't see any value from having an auditor involved with the PMR process.

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