Why transparency is important
By law, the Department of Defense has to provide Congress and the public with an assessment of where it spends its money and to provide transparency of its operations.
Auditing the DoD
Auditing the Department of Defense is a massive undertaking. For one thing, it is the country’s largest employer, with 2.9 million people.
What audit does
The audit has to count the location and condition of every piece of military equipment, property, inventory, and supplies. And there are a lot of them.
Manpower in the audit
The audit was not a trivial effort, it required 1,600 auditors – 1,450 from public accounting firms and 150 from the Office of Inspector General.
Cost of the audit
With defense spending on auditing approaching a billion dollars a year, it was clear it would take a decade or more to catch up to the audit standards of private companies.
Audit 5.0 Initiative
And that we start an initiative for the 5th generation of audit practices ( the Audit 5.0 Initiative ) with machine learning, predictive analytics, Intelligent sampling and predictions.
Spinning off the good parts learned from the Audit 5.0 initiative
Working together, the defense department could create the next generation of machine-driven and semiautomated standards. Furthermore, it could help the Independent Public Accounting firms (KPMG, EY, PwC, Deloitte, et al) create a new practice and make them partners in the Audit 5.0 initiative.
Advantages of Audit 5.0
Spinning up these activities up would dramatically reduce the department’s audit costs, standardize its financial management environment, and provide confidence in their budget, auditability, and transparency.