Auditor General of the Air Force—Mr James R. Speer

Air Force Comptroller, July, 2004

External Quality Control Program (or Peer) Reviews

Occasionally, I am asked, "Who audits the auditors?" This question has become even more relevant recently. Specifically, trends in accounting practices and subsequent audits over the last few years have shown how damage to creditability can bring down the "biggies" in an industry or profession. Once lost, creditability is difficult to regain regardless of the resources expended.

The short answer to the question above is government audit organizations performing audits in accordance with Comptroller General government auditing standards should have an external peer review at least every 3 years by reviewers independent of the reviewed organization. The external peer review determines whether, during the period reviewed, (a) the audit organization's internal quality control system was adequate and (b) quality control policies and procedures were complied with to provide reasonable assurance the audit organization met professional standards.

So what does this mean? Simply put, AFAA will undergo an external peer review in FY 2005 by another audit activity from the DoD Inspector General (DoDIG) community. Similarly, the AFAA will perform an external review of another service audit organization. The reviews will be conducted in conformity with standards and guidelines established by the President's Council on Integrity and Efficiency (PCIE) and receive oversight from the Audit Policy and Oversight function of the DoDIG. The reviews are a fundamental requirement to ensure creditability of audit results. This external "look" also validates to our Air Force customers that AFAA product and process assurance systems are working as intended and comply with government auditing standards.

Besides requiring an external peer review, the Government Auditing Standards related to quality control and assurance also require that each audit organization have an appropriate internal quality control system in place. An audit organization's system of quality control encompasses the organization's structure and the policies and procedures established to provide reasonable assurance of complying with applicable standards. An audit organization's internal quality control system should include ongoing procedures for monitoring whether the policies and procedures related to the standards are suitably designed and effectively applied.

The Naval Audit Service completed the last external review of the AFAA in July 2002. The resulting report indicated the system of quality control for the AFAA in effect for audit reports issued during the 6-month period ended 31 March 2002 was designed in accordance with quality standards established by the PCIE. The report provided AFAA with reasonable assurance of material compliance with professional auditing standards in conducting audits for our Air Force customers. Accordingly, we received an unqualified opinion on our system of audit quality control.

An unqualified peer review opinion not only provides significant feedback to our organization, but is a significant endorsement to our clients and others within the profession. To illustrate, other audit organizations can rely on our work given the work is conducted within standards. Reliance on our internal audit results can reduce detailed testing and costs to Air Force clients.

The AFAA takes seriously the charge to provide objective and balanced audit results consistent with professional standards. Every Agency member plays an important role to ensure we continue providing world-class audit services to our Air Force customers.