Auditing Firm Quits

Not only is America's space agency beleaguered by the ongoing revamp of its shuttle program and a new, underfunded vision for space exploration as put forth by President Bush, but now it's in financial hot water. Its former auditing firm, PriceWaterhouseCoopers, reports $565 billion posted to NASA accounts has been riddled with significant errors and poor documentation.

PriceWaterhouseCoopers reportedly quit its NASA assignment because of the irregularities cited in the report.

The auditing firm says there have been major breakdowns in the space agency's financial controls. Hundreds of millions of dollars are unreconciled and there's a $2 billion discrepancy between what NASA says it has and what's actually sitting in the agency's accounts, according to a company report.

"The documentation NASA provided in support of its September 30, 2003, financial statements was not adequate to support $565 billion in adjustments to various financial statement accounts," the auditor wrote in a Jan. 20 report to Robert Cobb, NASA's inspector general. The report also mentioned "significant errors" in financial statements provided by NASA.

The space agency says the discrepancies are the result of a huge restructuring of its accounting system, which included account consolidation and new accounting software. The other problem, according to NASA officials, is that the agency operates ten "very independent" research centers, all of which have different methods for tracking cash.

Still, Shyam Sundar, a professor in accounting at the Yale School of Management, says the space agencies accounts are "a big mess."

"If NASA would have been a public company, the management would have been fired by now," he said.

FMI: www.nasa.gov