Tag Archives: MRD

Updated DCAA Guidance on Expressly Unallowable Costs

In recent months, expressly unallowable costs have emerged as a focal point for the Defense Contract Audit Agency (DCAA). DCAA has issued two Memorandums for Regional Directors (MRDs) providing auditors with new guidance on identifying expressly unallowable costs, much to the dismay of contractors who believe that the guidance does not align with the intent of the applicable cost principles. These MRDs likely mean that contractors will receive more penalty recommendations than in years past, in addition to potential assertions of CAS 405 non-compliances. Continue reading Updated DCAA Guidance on Expressly Unallowable Costs

DCAA Updated Audit Guidance on the Treatment of Overdue Indirect Rate Proposals

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

Audit Alert on Evaluating the Adequacy of Cost Impact Proposals

On September 19, 2014, the Defense Contract Audit Agency (DCAA) issued a memorandum for regional directors, “Audit Alert on Evaluating the Adequacy of Cost Impact Proposals,” referencing a DCAA Cost Impact Adequacy ToolContinue reading Audit Alert on Evaluating the Adequacy of Cost Impact Proposals

DCAA Access to Contractor Employees

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.

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DCAA Audit Guidance on Placing Reliance on Scanned Images

On August 15, 2013, the Defense Contract Audit Agency (DCAA) issued a Memorandum for Regional Directors (MRD) (13-PPS-016(R)) providing new guidance on testing contractors’ document scanning/imaging processes in order to establish reliability of scanned documents in lieu of hard copy originals. FAR 4.703 permits the use of scanned images in lieu of original documents for record retention purposes.

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DCAA Audit Guidance on Detecting Instances of Fraud in Attestation Engagements

By: Kayla See

On July 30, 2013, the Defense Contract Audit Agency (DCAA) issued a Memorandum for Regional Directors (MRD) (13-PAS-014(R)) regarding “Audit Guidance on Detecting Instances of Fraud in Attestation Engagements.” This memo reiterates the requirements for DCAA audit teams to design examination engagements to detect instances of fraud and other noncompliance with applicable laws, regulations, and contract and agreement terms and conditions that may have a material effect on the subject matter. The memo supplements previously updated language within the DCAA’s Contract Audit Manual (CAM 4-702) and associated training provided to auditors in March and April of this year.

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