For high risk contractors, the auditors must perform a risk-assessment and develop a sampling plan that is unique to each contractor. This risk assessment is updated each year. Auditors are directed to consider the following risk factors:
- Specific concerns of the ACO, the PCO, and the COR (administrative contracting officer, procurement contracting officer and contracting officer's representative)
- Reported accounting or billing system deficiencies.
- Audit leads or other significant risk factors identified in the permanent files within the past two years.
- Improper payments identified in previous reviews of public vouchers.
- Significant number of previously rejected public vouchers attributable to a situation that has not been fixed (e.g. a certain contractor employee that makes lots of mistakes).
After completing the risk assessment, the auditor must then devise a sampling plan. If there are no identified risk factors, the auditor could, presumably, rely on the table used for low-risk contractors. If there are identifiable risk factors, the auditor will need to sample more vouchers than would be required for low-risk contractors.
Contractors should know when one of their public vouchers have been selected for review because one of the review steps requires the auditor to trace the amount claimed back to the contractors accounting records. Unless they have on-line access to the job cost ledgers, the auditors will be knocking at the door.
It is very important for contractors to accommodate auditor requests to trace billings back to accounting records very quickly. As we mentioned before, the auditors have only five days to perform their voucher reviews. If contractors don't make time available within these five days to accommodate this comparison, the auditor will, in all likelihood, reject the billing. Then it becomes necessary to resubmit the voucher and that will unnecessarily extend the time it takes to receive payment.
The text of the revised procedures can be read or downloaded here.
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