Summary: In response to a congressional request, GAO reviewed the Naval Audit Service's (NAS) effectiveness, specifically its: (1) allocation of audit resources; (2) report quality; and (3) independence.
GAO found several problems which significantly reduced NAS audit effectiveness, including: (1) the concentration of audit resources in areas not likely to produce significant monetary savings; (2) management's undue emphasis on auditors' strict adherence to standard work programs and to time limitations, preventing the full development of findings; (3) audits with insufficient evidence to support their findings; (4) a lack of management concurrence with findings and recommendations, delaying some reports and causing auditors to drop others that warranted action; (5) inaccurate and incomplete audit reports; and (6) an apparent inability to correct systemic weaknesses. GAO also found that, although there was no evidence that NAS was not conducting its activities independently and impartially, there were conditions which gave the appearance of impaired independence, including the: (1) close working relationship between NAS and the Office of the Assistant Secretary for Financial Management; and (2) rotation of military officers as auditors and directors to units to which they were once assigned or to which they could be assigned in the future.
