Thursday, December 31, 2015

Data and Records Provided to Auditors Stays With the Auditors - Perhaps

Ever try to get a contract auditor to sign a non-disclosure agreement? Its nearly impossible. Contract auditors feel they are above reproach and bristle at the thought that someone might think so lowly of their personal integrity that a non-disclosure statement is necessary. And, in most respects, that's true. We do not recall a case where a Government contract auditor leaked or provided information for personal gain. There are many documented cases where Government employees did so but these employees were not auditors. We do know of cases where contractor proprietary information was requested by and provided to Congressional committees by auditors and subsequently made public by those committees. But such cases seem rare.

Contractors should be aware however that information provided to auditors could get circulated to and among other Government agencies. A lot of proprietary information provided to the auditor is routinely provided to the contracting officer to negotiate and administer contracts. This is a proper use of such information as the contract auditor is a representative of the contracting officer and acts under the contracting officer's authority.

Many contractors however are not aware of the relationship between the auditor and investigative agencies.  Audit files and contractor proprietary data is routinely provided to investigative agencies. According to the DCAA Contract Audit Manual,
Auditors will cooperate with representatives of the FBI (Federal Bureau of Investigation), DoD criminal investigators, and criminal investigators from other agencies (presumably that would include the IRS investigators). Written material and access to files or working papers already in the possession of the auditor will be made readily available to such investigators. It is not necessary to inform the contractor when information is provided to investigators (see DCAAM 1-405).
Contractors should understand that data and information collected by the contract auditors could wind up in investigative files.

With that bit of cheery news, we at Pacific Northwest Consultants wish everyone a happy and prosperous new year.

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