On June 13, Mary Karen Wills will discuss “New Audit Challenges for Industry: The Practical Impact of the DCAA Selected Areas of Cost Guidebook.” Continue reading Advanced Forum on DCAA and DCMA Cost, Pricing, Compliance, and Audits
On July 22, Mary Karen Wills will co-present “Updates on Forward Pricing Rate Proposals and How to Meet DCMA’s Expectations for Forward Pricing Audits.” Continue reading DCAA and DCMA Audit and Compliance Boot Camp
On February 12, 2015, the Defense Contract Audit Agency (DCAA) issued a Memorandum for Regional Directors (MRD) with new guidance for the DCAA and Defense Contract Management Agency (DCMA) on how to handle the growing backlog of overdue contractor indirect rate proposals (also known as incurred cost submissions or ICSs). In keeping with FAR 42.703-2(c) and FAR 42.705(c), DCMA will start to unilaterally establish contract costs for the overdue fiscal years starting in June 2015. Continue reading DCAA Updated Audit Guidance on the Treatment of Overdue Indirect Rate Proposals
By: Mary Karen Wills
GAO-13-131: DoD Initiative to Address Audit Backlog Shows Promise, but Additional Management Attention Needed to Close Aging Contracts
The Senate Armed Services Committee Report accompanying the National Defense Authorization Act for FY2012 directed the Government Accountability Office (GAO) to review the criteria and procedures for conducting incurred cost audits. This audit stems from the large volume of contracts that the Department of Defense (DoD) has not closed out on a timely basis. Closing contracts within a required time frame can limit the government’s exposure to certain financial risk. One reason why contracts are not being closed timely is the large backlog of incurred cost audits that must be completed by the Defense Contract Audit Agency (DCAA). GAO assessed DCAA’s efforts underway to reduce the backlog of incurred cost audits and the challenges DoD faces in addressing the contract closeout backlog.
DCAA implemented an initiative that revised its focus on performing high-dollar-value or high-risk-incurred cost audits. The thresholds were raised from $15 million to $250 million for an automatic audit of incurred costs. DCAA revised its high-risk criteria and reduced the number of low-risk audits that would be randomly sampled. GAO found this initiative promising, but found that the DCAA has not fully developed the measures by which it will assess whether this initiative is reducing the backlog in a way that protects taxpayers’ interests. GAO recommended that DCAA develop a plan with time frames and measures to assess its progress toward achieving these objectives.