Tuesday, September 4, 2012

Auditor Jargon Part 7 - "Low Hanging Fruit"

Its been awhile since we posted an auditor jargon definition. These are words and phrases that auditors use in their conversations with one another and sometimes with contractors. These phrases usually carry specific meanings when used by contract auditors. Today's phrase is "low hanging fruit". We heard this one in a conversation with an auditor just the other day.

Picture an apple tree with ripened fruit. Some of the fruit is low hanging and you can reach it from the ground. You walk around and fill up your sack or bucket very quickly and rather easily. Other fruit is higher up and more difficult to pick. It takes more effort. First you need a ladder, then you have to position it just so, and then you have to climb up the ladder, pluck the fruit, and then climb down. Each trip up the ladder yields only a few apples before repeating the step over and over.

When auditors use the term "low hanging fruit", they are referring to costs that they can question, disapprove, or disallow with minimal effort. The allowability is pretty black and white, no shades of grey, no research to perform, no extensive justifications and rationale to write up and usually no arguments with the contractors. Auditors love low hanging fruit because it makes them feel like they have contributed to the acquisition process without having to expend too much energy. Some contractors have been known to purposefully leave some low hanging fruit for auditors to find as a way of distracting them bigger issues. This strategy is dangerous however because most auditors can sense something amiss, it opens up potential TINA issues (truth in negotiations), may render the estimating system inadequate, and when auditors' realize they're being duped, they usually dig deeper.

Examples of low hanging fruit might include:

  1. Consultant costs - FAR requires an agreement, an invoice and evidence of work performed. Many contractors do not maintain this tri-level support.
  2. Escalation - Anything a contractor proposes will be replaced by forecasts from the auditors very expensive escalation subscription service.
  3. Expired quotations for purchased parts.
  4. Employees not posting their timecards in a timely manner.

You can read parts 1 through 6 in this series by following these links.

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