Most long-time Government contractors have faced situations where over-zealous contract auditors or contracting officers make spectacularly wild conclusions based on little or no evidence to back it. It happens way too often and once the Government has dug in its heels on a matter, it takes a lot of time and energy to resolve.
This shouldn't happen. For audits performed by DCAA (Defense Contract Audit Agency), auditors are required by GAGAS (Generally Accepted Government Auditing Standards, aka Yellow Book) to obtain sufficient, appropriate evidence to provide a reasonable basis for their findings. Appropriateness is the measure of the quality of evidence that encompasses its relevance, validity, and reliability while sufficiency is the measure of the quality of evidence used to support the findings and conclusions (GAGAS 6.57).
The DoD Inspector General has, from time to time, called into question the sufficiency of the audit evidence used by DCAA to back up its findings. In fact, in its latest peer review of DCAA, the DoD-IG criticized DCAA because of a lack of documented supervisory review of the sufficiency of audit evidence. Seemingly, no one in the supervision and management chain of command was validating the sufficiency of auditors' work to support their conclusions and recommendations.
Thankfully, DCAA has now amended its internal procedures to require supervisors to make affirmative statements that the audit evidence gathered during the audit is sufficient to support the objectives of the audit and the resulting conclusions and recommendations. Perhaps this change will reduce the occurrence of audit findings that have no merit.
The new guidance can be viewed or downloaded here.
Nice post, thanks. While I personally have not experienced this, some of my peers recently told me their DCAA auditors are still pushing back on electronic documents and are adamant about reviewing the original source hard copy document. With more systems going paperless (eg Concur travel and E-Receipts) do you have any guidance that could help convince an auditor that electronic documents are sufficient and reasonable?
ReplyDeleteSeems to us that if a document was never paper such as an E-Receipt, DCAA would be hard pressed to argue that a contractor did not retain the original source document. Apps like Concur present a slightly different problem because usually employees snap a picture of a receipt and upload it to Concur and may not retain the original. Even when they do, the company usually doesn't want them. However, DCAA has a similar system with their travel claims. Auditors are not required to submit paper copies. They scan supporting data and attach it to an electronic claim.
DeleteIf you think about it, timekeeping has gone 100% electronic at many if not most contractors. Employees enter their time, submit their timecards, supervisors review and approve electronically. There is no paper involved at all.
DCAA (and other contract auditors) are going to have to catch up with the times.