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Grant Thornton Has Starring Role in Marine Corps’s Snafu Audit

How's this for a Charlie Foxtrot: the professional services firm known as Grant Thornton (or, if you prefer, Golf Tango) is smack dab in the middle of the Pentagon's messy accounting.

Reuters has the whole scoop but the long/short of it is this: last year the Defense Department announced that the Marine Corps "passed" its financial audit, the first branch of the military to do since a mandate was passed 20 years ago. But this past March, the inspector general for the DoD pulled the unqualified opinion, saying, "new information […] cast doubt on the reliability of the audit." 

That audit was performed by Grant Thornton.

And it sounds pretty sloppy! Cecilia Ball was in charge of the inspector general team that oversaw GT's work and they saw lots of bad audit stuff:

To oversee Grant Thornton’s work on the Marine Corps job, the inspector general’s office named a team headed by Ball, one of its veteran auditors. Ball’s group, working mostly out of her agency’s offices in Kansas City, Missouri, soon began finding flaws in the auditing of the Corps’ financial statements.
According to emails reviewed by Reuters, Grant Thornton had submitted a spreadsheet crucial to determining the audit opinion, but it lacked documentation to back up the numbers in it. The team also found that Grant Thornton approved Marine Corps data without asking for the receipts and other papers to confirm that the information was correct.
Ms. Ball and her team made a fair amount of noise about this, going so far to recommend a qualified opinion. Incredibly, Ball's boss, Daniel Blair, didn't mind that the work was a little below standards:
On Dec. 10, 2013, Blair sent an email to Ball and her immediate supervisor, Edward Blair, and other inspector general officials. In it, Daniel Blair wrote: “I have said repeatedly that the team needed a solid rationale for why a disclaimer was the correct option.”
Edward Blair, no relation to Daniel, declined to comment.
Daniel Blair went on: “The level of documentation in GT’s work papers could be better. Some may even interpret this as a violation of audit standards.” But, he added, the amount of documentation needed isn’t fixed, but “a matter of professional judgment.”

Edward Blair could hardly keep from laughing:

“The bottom line is GT did not adequately document or support their conclusion about” the reliability of the Marine Corps’ record-keeping, he wrote. The firm had not made sure that financial data in the Marine Corps’ computer systems was accurate, he said in the email, and the inspector general’s team had to do “compensating work” as a result.

Maybe related — Daniel Blair seemed to be cozy with the GT partner on the engagement:

[A]s Ball’s team pressed for a qualified opinion, Tracy Greene, the Grant Thornton partner overseeing the firm’s Marine Corps job, sent an email to Blair. If the inspector general’s office wasn’t satisfied with Grant Thornton’s work, she said, “I hope you can understand that the firm will consider the situation as a risk to our reputation.”
Greene and Blair had a longstanding professional relationship. The two worked together throughout the 1990s in the Government Accountability Office, the investigative arm of Congress. Records show that they also often appeared together on discussion panels on government accounting.
Cronyism, billions in unaccountable transactions, an egregious lack of responsibility — this is just another day at the office for the DoD. Grant Thornton, on the other hand, is so far in over its head that they can't muster anything more than, “We are confident that our work complied with all professional standards.”
Wishful as it may seem, I think we can all agree that "We are confident that we FUBAR," would have been more appropriate.

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