The Naval Audit Service Should Be Strengthened
FGMSD-78-5: Published: Nov 11, 1977. Publicly Released: Nov 11, 1977.
- Full Report:
By law, the head of each government agency must set up and maintain systems of accounting and internal control, of which internal audit is an integral part. In the Navy, internal auditing is done by the Naval Audit Service under the direction of the Assistant Secretary of the Navy for Financial Management, who also serves as Comptroller.
The Navy should make its internal audit stronger to keep top management better informed on how operations are conducted and recommendations for improvement are carried out. The internal audit function is not placed high enough in the Navy's organization to grant auditors maximum independence in conducting and reporting on audit work. The current organizational structure is inconsistent with the Comptroller General's audit standards which advocate that the audit function be placed at the highest practical level. The Department of Defense policy requires all nonmilitary positions to be filled by civilians. Contrary to this policy, the Audit Service is headed by a military officer and it employs 34 other military officers. The Naval Audit Service has been unable to meet its audit goals and has a large audit backlog, due in part to the massive work load and the use of audit resources on work not in keeping with its primary mission. The Navy's audit follow-up system does not provide assurance that all deficiencies identified by audits are promptly corrected. Opportunities for savings are lost and inefficient and ineffective operations continue.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of Defense should use his reorganization authority to relocate the Naval Audit Service under the Secretary or Under Secretary of the Navy and direct the audit staff to report directly to that official. The Secretary of Defense should direct the Secretary of the Navy to fill all positions, including the Director, with professionally qualified civilians and improve the Audit Service's ability to cover its work load. Alternatives to be considered are to: (1) reduce significantly the use of audit staff on special requested and nonappropriated fund work and bring the audit work load and staff capability into balance; and (2) strengthen the audit function and require the Naval Audit Service to participate more fully in the process.