Thursday, August 18, 2011

DCAA Adds New Internal Review Requirement

Last month, DCAA introduced a new internal review step to its audit process. Its called the "Independent Reference Review" or IRR, and is designed to ensure quality audit reports in compliance with applicable auditing standards. In reality, the IRR is a cumbersome process that will do little to improve audit quality and will likely result in additional (probably significant) delays in issuing audit reports. But, it will make the oversight agencies (e.g. the IG organizations and GAO) happy.

The IRR is a process in which an experienced auditor, who is independent of the audit, verifies all significant facts, figures and dates are correctly reported; that the findings are adequately supported by evidence in the audit documentation; and that the conclusions and recommendations flow logically from the evidence. The reason that this will add a significant delay to issuing the audit report is that the IRR occurs after the field work is completed and after the supervisor has already reviewed and approved the audit report for issuance. Adding this extra step with its herculean checklists, dispute resolution process, and certification requirement can only add to the time it takes to issue an audit report.

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