02/10/11 Auditing the Auditors

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The Government Accountability Office is the investigative arm of Congress.  It has long been considered the gold standard when it comes to audits.  Yet, who’s checking the GAO’s work?

So we looked at this report the GAO delivered to Congress last year. The target was career colleges.  Unlike private, not-for-profit colleges and state universities, career-colleges are operated on a for-profit basis.

The GAO conducted an undercover sting.  Investigators spoke with career college officials while pretending to be prospective students.  The GAO claims that all 15 colleges tested engaged in unethical recruiting practices.  And some possibly encouraged fraudulent practices.

But there were several claims in the report that didn’t add up.  So we submitted a detailed list of questions to the GAO.  Weeks later the GAO quietly issued this revised report.  The changes were dramatic.  In many cases, it was the GAO investigators who suggested unethical and fraudulent practices with career college officials merely acknowledging the GAO statements.

Several colleges then hired a consulting firm to further investigate. The firm analyzed available audio recordings of the GAO sting.  The results are stunning.  The GAO appears to have fabricated entire conversations.  Nearly the entire investigation and report is a fraud.

A private audit firm could have faced federal fraud charges if it did the same thing as the GAO.