Even though DCAA has been taken out of the billing loop, so to speak, there is still a need for audit oversight. DCAA has devised a risk-based approach to rendering that oversight. Essentially, it divides contractors into high-risk/low-risk. High risk contractors are those that bill for more than $250 million per year and those that have had questioned costs in previous incurred cost audits (those questioned costs must meet certain percentage thresholds as we explained yesterday). Billings from low-risk contractors are randomly selected for a pre-payment review. For high-risk contractors, billings are also sampled but the process is a bit more complex and there will probably be more billings (percentage-wise) selected at high-risk than at low-risk contractors.
Once an interim public voucher (i.e. a billing or an invoice) is selected, the auditor has only five days to make an evaluation. The steps involved in that evaluation include:
- Does the voucher have the correct contract number and CAGE code?
- Do the contract number, voucher number, and dollar amount on the voucher agree with the attached supporting documentation?
- Are billed costs with the period of performance?
- Does the voucher include current and cumulative billed amounts?
- Does the Contracting Officer or the Contracting Officer's representative have any specific concerns related to the contract or voucher?
- Are costs/fee billed in accordance with contract provisions?
- Did the contractor use appropriate billing rates?
- Do the current and cumulative billed costs reconcile to the contractor's accounting records?
- If the voucher contains significant subcontract or supplies and service costs, are they in accordance with the requirement that the be paid within the terms and conditions of the subcontract or invoice (normally within 30 days)?
- Are the fees and costs claimed within the contract funded and/or ceiling amounts?
From the preceding listing, you can see that there is only one step that involves the contractor; Do costs reconcile to the contractor's accounting records. Everything else should be on-file in the audit office, including a provisional billing rate approval letter. So that's the substance of the auditors' reviews. Contractors with a single contract that bill monthly can expect one of its public vouchers to be reviewed under this new procedures. That could add up to five days from the time the voucher is submitted to the time it is paid. However, it is also likely that it will not add any time to the process because the five day audit cycle is normally built into the 30 day period in which the Government must pay.
Click here to read Part 4.
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