SECRECY NEWS
from the FAS Project on Government Secrecy
Volume 2018, Issue No. 43
July 2, 2018

Secrecy News Blog: https://fas.org/blogs/secrecy/

PENTAGON AUDIT: "THERE WILL BE UNPLEASANT SURPRISES"

For the first time in its history, the Department of Defense is now undergoing a financial audit.

The audit, announced last December, is itself a major undertaking that is expected to cost $367 million and to involve some 1200 auditors. The results are to be reported in November 2018.

"Until this year, DoD was the only large federal agency not under full financial statement audit," Pentagon chief financial officer David L. Norquist told the Senate Budget Committee in March. Considering the size of the Pentagon, the project is "likely to be the largest audit ever undertaken," he said.

The purpose of such an audit is to validate the agency's financial statements, to detect error or fraud, to facilitate oversight, and to identify problem areas. Expectations regarding the outcome are moderate.

"DOD is not generally expected to receive an unqualified opinion [i.e. an opinion that affirms the accuracy of DoD financial statements] on its first-ever, agency-wide audit in FY2018," the Congressional Research Service said in a new report last week.

See Defense Primer: Understanding the Process for Auditing the Department of Defense, CRS In Focus, June 26, 2018:

In fact, "It took the Department of Homeland Security, a relatively new and much smaller enterprise, about ten years to get to its first clean opinion," Mr. Norquist noted at the March Senate hearing.

In the case of the DoD audit, "I anticipate the audit process will uncover many places where our controls or processes are broken. There will be unpleasant surprises. Some of these problems may also prove frustratingly difficult to fix."

"But the alternative is to operate in ignorance of the challenge and miss the opportunity to reform. Fixing these vulnerabilities is essential to avoid costly or destructive problems in the future," Mr. Norquist said.

JUSTICE KENNEDY RETIRES, AND MORE FROM CRS

With the announcement of Justice Kennedy's retirement from the US Supreme Court, the Congressional Research Service issued several new and updated reports on the nomination process and related issues.

Justice Kennedy Retires: Initial Considerations for Congress, CRS Legal Sidebar, January 28, 2018:

President's Selection of a Nominee for a Supreme Court Vacancy: Overview, CRS Insight, June 27, 2018:

Supreme Court Nomination: CRS Products, CRS Legal Sidebar, June 29, 2018:

Other noteworthy CRS products published last week include the following.

Cyber Supply Chain Risk Management: An Introduction, CRS In Focus, June 29, 2018:

Global Research and Development Expenditures: Fact Sheet, updated June 27, 2018:

U.S. Research and Development Funding and Performance: Fact Sheet, updated June 29, 2018:

Trade Deficits and U.S. Trade Policy, June 28, 2018:

Organizing Executive Branch Agencies: Who Makes the Call?, CRS Legal Sidebar, June 27, 2018:

Efforts to Preserve Economic Benefits of the Iran Nuclear Deal, CRS In Focus, June 27, 2018:

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Secrecy News is written by Steven Aftergood and published by the Federation of American Scientists.

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