On July 30, 2013, the Defense Contract Audit Agency (DCAA) issued a Memorandum for Regional Directors (MRD) (13-PPS-015(R)) addressing the recent debate over auditors’ access to contractor employees. While DCAA continues to maintain that access to contractor employees is essential for its audit activities, many contractors are pushing back, arguing that FAR Part 52.215-2 grants DCAA access to records but not necessarily employees.
DCAA must follow the Generally Accepted Government Auditing Standards (GAGAS), which require auditors to make inquiries of management and key contractor personnel during the planning stages of an audit. Based on this requirement, DCAA views contractor employees in the same way it views contractor books and records. If access to certain employees is necessary to complete audit objectives and satisfy GAGAS requirements, then access should be granted.
This MRD provides guidance for auditors experiencing difficulty gaining access to contractor employees. Going forward, auditors will formally report these instances as denials of access to contractor records, potentially resulting in increased questions, costs, and/or suspension of payments on contracts affected by the denial.
The views expressed in this article are those of the authors and do not necessarily reflect the position or policy of Berkeley Research Group, LLC.