March 28, 2018 —
We conducted this evaluation to determine whether the actions of senior Department of the Navy (DON) officials violated Government Auditing Standards (GAS) and adversely impacted the independence of the Naval Audit Service (NAVAUDSVC) and its auditors. Specifically, we evaluated five Defense Hotline allegations regarding Audit 2012-128, “Alleged Sexual Assault Victims’ Career Paths,” (Victims’ Career Path Audit).
On February 3, 2012, the NAVAUDSVC began the Victims’ Career Path Audit. The objective of this audit was to determine whether Navy personnel reporting to have been sexually assaulted subsequently follow normal Navy career paths. This audit required access to information in the Naval Inspector General Hotline Tracking System (NIGHTS). However, the Navy Office of the Inspector General (NAVINSGEN) denied the NAVAUDSVC access to most of the information in NIGHTS.
The audit report was not issued until August 10, 2017, more than 5 years after the audit began. During this time, the audit team was replaced and two other NAVAUDSVC audits that required NIGHTS access were not completed. Between December 11, 2015, and June 3, 2016, the Navy Deputy General Counsel (DON-DGC) conducted a management inquiry addressing the management of the audit. Further, between March 19, 2013, and January 19, 2017, because of a vacancy in the Office of the Under Secretary of the Navy, the Auditor General of the Navy (AUDGEN) reported through the Navy General Counsel (DON-GC) to the Secretary of the Navy (SECNAV).
In response to hotline complaints, we evaluated the following five allegations:
•The actions of AUDGEN and the DON-DGC violated, and required auditors to violate, GAS independence standards because the AUDGEN would not approve the Victims’ Career Path Audit report as written and the DON-DGC revised the Victims’ Career Path Audit report.
•The AUDGEN violated NAVAUDSVC policy and GAS requirements for timely reporting.
•The Navy Office of the General Counsel (DON-OGC) mishandled a management inquiry regarding the AUDGEN’s management of the Victims’ Career Path Audit.
•The AUDGEN removed an audit team as retribution for issuing the draft report to the SECNAV without the AUDGEN’s approval.
•The AUDGEN and Deputy AUDGEN did not pursue the completion of or issue the required curtailment letters for two other audits.
We did not substantiate the allegation that the actions of the AUDGEN and the DON-DGC violated, and required auditors to violate, GAS independence standards. However, we identified a structural threat to the NAVAUDSVC’s independence. This structural threat resulted from the AUDGEN reporting through the DON-GC to the SECNAV and then to the individuals performing the duties of the Under SECNAV. To comply with GAS, the AUDGEN should report directly to the SECNAV or the Under SECNAV. However, we did not find any evidence that this structural independence threat impaired the NAVAUDSVC’s ability to perform work or report results objectively for the Victims’ Career Path Audit.
On December 4, 2017, the SECNAV resolved the structural independence threat by realigning the AUDGEN to report directly to the Under SECNAV. However, we determined that SECNAV Instruction 7510.7G, “Department of the Navy Internal Audit,” January 12, 2017, allows the SECNAV to appoint a designee for oversight of the AUDGEN, which would conflict with GAS.
We substantiated the allegation that the AUDGEN violated GAS and NAVAUDSVC requirements by not issuing an audit report in a timely manner. We determined that this occurred because the NAVINSGEN denied the auditors access to NIGHTS and senior NAVAUDSVC officials were unable to agree on the reporting of the NIGHTS denial of access in the audit report. The audit team developed a draft report that identified the denial of access as an audit finding and a scope impairment. However, the AUDGEN disagreed and decided the denial of access should be reported only as a scope impairment. This disagreement was not resolved for 2 years. We determined that the absence of official policies for resolving disagreements between senior NAVAUDSVC officials contributed to the delays in resolving this disagreement. Because of the disagreement, the NAVAUDSVC issued the report more than 5 years after the project announcement.
We did not substantiate the allegation that the DON-OGC mishandled a management inquiry regarding the AUDGEN’s management of the audit. We determined that the DON-GC issued policy regarding NAVAUDSVC access to hotline records.
We did not substantiate the allegation that the AUDGEN removed the Victims’ Career Path Audit team as retribution for issuing the draft report to the SECNAV, Chief of Naval Personnel, and other senior DON officials. We determined that the AUDGEN removed the audit team in an effort to complete the audit.
We also did not substantiate the allegation that the AUDGEN and Deputy AUDGEN did not pursue the completion of or issue the required curtailment letters for two other audits. However, we concluded that NAVAUDSVC officials should have issued suspension letters for these two audits while attempting to obtain NIGHTS access.
We recommend that the:
•SECNAV update SECNAV Instruction 7510.7G to remove the reference to a designee to avoid a future structural independence threat.
•Acting AUDGEN determine whether to complete the two other NAVAUDSVC audits that required NIGHTS access and issue an audit suspension letter or curtailment letter, as required by the NAVAUDSVC Handbook.
Management Comments and Our Response:
The SECNAV agreed with our recommendation to update SECNAV Instruction 7510.7G to remove the reference to a designee to avoid a future structural independence threat. The SECNAV stated that he removed the reference to a designee effective immediately. He stated that he expects the Instruction to be published by May 1, 2018. Therefore, the recommendation is resolved but remains open. We will close the recommendation once we receive the updated SECNAV Instruction 7510.7.
The Acting AUDGEN agreed with our recommendation to determine whether to complete the two other NAVAUDSVC audits that required NIGHTS access and issue an audit suspension letter or a curtailment letter, as required by the NAVAUDSVC Handbook.
The Acting AUDGEN decided to curtail both audits. On January 31, 2018, the NAVAUDSVC issued a curtailment letter for one of the audits and closed the other audit without a curtailment letter because the NAVAUDSVC did not issue a formal announcement letter. We verified that the NAVAUDSVC took these actions. Therefore, this recommendation is closed. No further comments are required.
This report is a result of Project No. D2017-DAPOIA-0111.000.