Attorney General John Ashcroft Picks Arthur Andersen For FBI Review
Requiem for Enron
Regarding Kenneth Lay: "First, founders of companies don't tend to ignore what's going on with their babies and, second, he knows all about accounting practices," says a Wall Street banker who spoke on condition of anonymity. In fact, the 59-year-old Enron chairman studied economics at the University of Missouri, earned a doctorate in the subject and, as a naval officer serving in the Pentagon worked to develop more efficient accounting systems. Lay also served as an aide to a federal-government regulator for the natural-gas industry."
"Arthur Andersen" has 64 contracts covering a range of consulting services
Pentagon Auditors Get Poor Grade in Examination
Associated Press
By Larry Margasak
December 5, 2001
WASHINGTON (AP) - The agency that investigates fraud and abuse inside the Pentagon is getting a poor grade after it was caught cheating on a review of its own performance.
The Pentagon inspector general's office was subjected to an intensive audit this fall after discovery that the watchdog office destroyed internal documents, and created new ones, to win a favorable grade in a previous check of its work.
The discovery invalidated the previous review, which had given the office a passing grade.
In the new review, also called a "peer review," federal investigators gave the Pentagon a "qualified opinion," the second-lowest rating a federal inspector general can receive.
The review found the agency didn't always follow proper auditing procedures and raised new questions about its paperwork, noting some investigative documents were prepared or changed after the fact.
"If working papers are added or changed after a report is issued, they may no longer support the issued report or clearly support the auditor's conclusions and judgments," the review said.
The review said the Pentagon agency had a subpar performance in planning audits, documenting its conclusions and, in one instance, allowing an auditor to review a program in which he directly participated.
The Defense Department's deputy inspector general, Robert Lieberman, said his agency is correcting the problems, and a new computer program will avoid many of the mistakes.
"A lot of these things are not show-stoppers in terms of the accuracy of the (audit) reports themselves," Lieberman said. "The peer review is concerned with procedures rather than results."
Lieberman would not discuss the document destruction, revealed by a whistle-blower and confirmed by an internal report.
Inspector general offices are installed inside federal agencies as internal watchdog to investigate fraud, waste and abuse and to audit financial statements, a massive task in the Pentagon, which spends some $300 billion a year.
President Bush has nominated Joseph Schmitz to be the Defense Department's new inspector general. He has not been confirmed by the Senate.
"Once President Bush's nominee for the IG job is in place, he will need to clean house from top to bottom. Heads must roll," said Sen. Charles Grassley, R-Iowa, a frequent critic of the Pentagon audit agency.
Federal audit guidelines could have justified an adverse rating, the lowest possible, had the review identified similar deficiencies in all aspects of the Pentagon's inspector general operations. The agency was spared that grade because the problems were discovered in only two of its four audit divisions.
GAO lays down the law: auditors of agencies can’t be consultants