Friday, August 30, 2013

Access to Records - The "Slow Roll"

We were auditors once and we knew when we were getting the "slow roll" by Government contractors. The "slow roll is a condition where contractors keep promising something but would regularly miss promised due dates or where contractors would deliberately withhold some key piece of data and wait for us to find it missing and then have to re-request it and wait some more, or where contractors promised to "look for it" but when reminded, claimed they forgot or were too busy, or where contractors set up a single point of contact for data requests that turned in to the Post Office's dead letter office. We felt that the slow roll was the most insidious form of denial of access to records. We were never much bothered by the categorical denial - at least the contractor was forthright. With a categorical denial, we simply elevated the problem, stopped the audit and went on to something else. We had plenty of other audits to work on. With the "slow roll", there was the potential of wasting significant audit resources by waiting on data. One major contractor, in a candid moment, told us that they could not control the number of auditors assigned to their plant but they could sure control the efficiency and effectiveness of those auditors by cranking up the company's passive-aggressive behavior.

In an attempt to mitigate, or at least minimize, the infamous "slow-role", DCAA (Defense Contract Audit Agency) revised its instructions about five years ago to require auditors to assign realistic due dates to every data request. Then, if those dates were missed, the auditor would immediately initiate the denial of access to records procedures that we described yesterday. According to the latest instructions, DCAA believes that supporting documentation should be readily available and provided upon request. This means immediately or within a few minutes but less than an hour. The guidance also cautions auditors to consider extenuating circumstances such as when the data is stored offsite or is voluminous or if contractor analysis is required.

Contractors use of liaisons should not delay or inhibit auditor access to contractor personnel. Auditors usually like to receive support directly from the person responsible for the information. If the use of liaisons results in delays, disruptions, or other encumbrances, the auditor will most likely write it up as a denial of access to records. Contractors need to be sensitive to the perceptions of auditors in these matters.

Denials, whether categorical or of the "slow role" variety may result in "suspended" costs and a DCAA Form 1. DCAA can suspend costs claimed on public vouchers (cost-reimbursable contracts) where there isn't sufficient data to support the allowability, allocability, or reasonableness of those costs. This doesn't mean that the costs are unallowable. It simply means that until such time as the contractor provides the data required for the auditor to assess the propriety of claimed costs, the Government is going to keep the money. Eventually, the contractor will get paid however in the meantime, their cash flow is disrupted.

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