Friday, September 23, 2011

DCAA Areas of Focus

Michael Bame, who works for a defense contractor and blogs about contracting matters, wrote recently that he  was briefed by DCAA on areas that the Agency expects to concentrate on in the coming months. On an annual basis, DCAA meets with major contractors (those having more than $100 million in flexibly priced contracts) to discuss audit plans for the upcoming fiscal year. These briefings focus on areas that are somewhat unique to risks associated with the particular contractor being briefed. Most likely, the briefing described by Mr. Bame was tailored for his employer because the Agency has not issued "audit alerts" that correspond to these items. Nevertheless, the areas of emphasis he listed, while not "new", are interesting and informative in a general sense.

Online Source

The areas of identified DCAA focus include the following:

  • Distinguishing between business development and marketing costs (in general, business development is allowable while marketing costs are not).
  • More scrutiny in making sure contractors do not exceed the cap on meals, lodging, and incidental expenses (Historically this has not been a high risk area meaning that findings have been rather insignificant. After 15 years, most contractors have this one down pat).
  • Assessing adequacy of estimating and purchasing policies, procedures, and practices
  • Making sure that bonuses are paid pursuant to a formal plan
  • Personal use of company cell phones (We wonder why DCAA would expend resources auditing this area. How significant would any incremental costs be?)
  • Health insurance paid for nonqualified dependents (this was the subject of an audit alert a few months back).
  • Making sure contractors retain original documents after scanning (We're not sure what this has to do with audits of costs. Its more a record retention issue under the purview of the contract administrator.)

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