Auditing the Auditors – Peer Review of the GAO

The moment that an auditor is audited always brings with it a sense of trepidation.

The good auditor knows where they are strong and where they are weak and are prepared to accentuate the positive and transparently work on the negative.

The less good auditor fears peer review.

So it was with great interest that we recently read an international peer review of the United States Government Accountability Office (GAO).

An international peer review team with representatives from the supreme audit institutions of Norway, Denmark, Canada, the United Kingdom, and the Bahamas reviewed the quality assurance system that GAO has established for managing its performance and financial audit practices.

The peer review of GAO’s performance and financial audit practices for the year ending December 31, 2013, was completed in September 2014.

The review gave the GAO a clean opinion confirming that the quality assurance system was suitably designed and operating effectively.

As a reminder to all audit organisations, the peer review noted:

Overall, the peer review team considers that GAO has structures, arrangements, and a culture that clearly prioritize quality and independence,

In what was too laudatory tones for our liking the review made the valid point:

We were struck by the extensive arrangements in place for quality assurance within a very clear and comprehensive framework and with a valuable online guidance tool to assist staff in meeting quality standards.

One observation that surprised us was:

Around 100 executives are authorized to approve reports for publication.

As the report notes

This underlines the importance of clarity in practices across the organization to ensure consistency across the product range.

It would be interesting to do a comparison with other supreme audit institutions to assess what signature ratio (number of approved people to release reports to size of the organisation).

But perhaps the most telling observation is that which goes to the heart of how the reports are received.  The report noted:

In some of the reports reviewed, the peer review team found that the message could have been presented more simply, using plain language. GAO may wish to consider enhancing the role of communication analysts and look for additional opportunities to communicate the message to the intended reader more clearly.

We will wait with interest to see if GAO reports become easier to read.

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