24 



Auditing 

 Up Front 



Frank DeGeorge's stock-in-trade is 

 hindsight. As Inspector GeneraJ of 

 the Commerce Department, he 

 spends much of his time reviewing 

 what has already happened, not what may be 

 coming up. That, after all, is how auditors 

 normally work. 



But in the field of high-tech procurements, 

 DeGeorge and his staff are indulging in a 

 little foresight these days. A small, contro- 

 versial — and sometimes influential — unit of 

 his office kibitzes throughout the process as 

 other Onnmerce agencies develop and in- 

 stall major computer systems. 



In its search for efficiencies, the Office of 

 Audits/Information Technology has pried 

 into such huge systems as the the National 

 Weather Services' big new satellite and ra- 

 dar system, the Census Bureau's prepara- 

 tions for the decennjal population count next 

 year and the Patent and Trademark Office's 

 (PTO's) ground-breaking program to store 

 acme 27 miUion documents on optical disks. 

 Together these systems, along with 10 

 other major computer systems Commerce 

 that agenaes are buying, will cost more than 

 $2.4 biUion over the next five years. 

 DeGeorge's office says its "front-end" au- 

 dits of these systems have cut their cumu- 

 lative cost by $300 million over the past 

 three years. 



The information systems auditing staff 

 may step into the lifespan of a major system 

 just as an agency is developuig the idea for iL 

 And it may continue to work with the agency 

 through cost-benefit analysis, design, pro- 

 curement and systems management The 

 goal is to streamline expenses "at the front 

 end, before problems can emerge," says 

 John D. Newell, who directs the office and 

 serves as assistant IG for auditing. 



The information technology office's ap- 

 proach is somewhat risky, like "trying to 

 take a snapshot of something that's mov- 



A division of the Commerce Department's Inspector General's 

 office is attempting to head waste and inefficiency off at 



the pass. 



BY KRISTIN KNAUTH 



ing," says Ronald D. Lieberman, acting dep- 

 uty assistant IG for information technology 

 audits. "Most IGs come in after a system is 

 runmng and focus on internal controls — sys- 

 tems development, verification of data and 

 so forth," Lieberman says. "We concentrate 

 on the decision-making process, alternatives 

 analysis, risk factors, whether a proposed 

 system will meet agency requirements. It's 

 much harder to write about something dy- 

 namic than something static." 



Auditors generally see front-end audits as 

 the "ideal way to operate," says June 

 Brown, IG at the Department of Defense. 

 But such audits are rarely undertaken in the 

 federal government. Brown adds, because 

 they require a large commitment of re- 

 sources. In 1981, when the General Ac- 

 countmg Office (GAO), which sets standards 

 for federal auditors, sought to require front- 

 end audits m federal agencies. Brown and 

 others opposed the move. "With 2,000 sys- 

 tems being developed in Defense at any 

 time, and each large system taking several 

 years to develop, it would have been impos- 

 sible to do," she says. "We objected to the 

 deep resources [it] could have entailed." 



Such budget-driven realism was again re- 

 flected in the GAO's update of auditing stan- 

 dards published late last year. Indeed, the 

 1988 version of the auditing "Yellow Book." 

 unlike its 1981 predecessor, did not even 

 mention the desirability of such audits. 



Today, Commerce's information technol- 

 ogy auditing office is the only institutional- 

 iied instance of front-end auditing in the fed- 

 eral government, although some other 

 departments use front-end audits on an ad 

 hoc basis. And the office is hardly the focal 

 point of DeGeorge's operation: The $1.3 

 million it wiD spend is only about 11 percent 

 of the Commerce IG's $14 million budget. 

 And not all of that $1.3 miUion goes to sup- 

 port front-end audits. 



The front-end approach has its pit&Us. Al- 

 though the auditors' recommendations are 

 not binding upon agencies and the office has 

 no procurement authority, its approach fre- 

 quently creates friction with auditees who 

 bridle at the contention that their proposals 

 are needlessly expensive or inefficient 

 Agency executives must either consent to 

 the office's recommendations, which often 

 entail radical shifts in planning and budget- 

 ing, or justify their dissenting opinons. 



DeGeorge and his staff have learned to 

 listen to agency viewpoints and in some 

 cases have revised their conclusions in re- 

 sponse to counterproposals. Says Newell, 

 "It's not competitive; we're working with 

 the team. We identify problems, they ideo- 



Knstin Knautk is a Washington-based fne- 

 lana writer specialixing in business, economics 

 and high lechnoto^L 



