Friday, July 1, 2016

DCAA to Undergo Another Peer Review

The Department of Defense Office of Inspector General recently announced that it is initiating a new peer review on the quality and adequacy of DCAA (Defense Contract Audit Agency's) audit work. The last quality control report was issued back in August 2014 and covered DCAA's system of quality controls in effect as of June 30, 2013. Federal audit organizations can receive a rating of pass, pass with deficiencies, or fail. DCAA received a rating of "pass with deficiencies". The deficiencies related to lack of sufficient documentation where the peer review team could not discern the judgment and conclusions drawn by DCAA auditors. Additionally there were instances where the documentation did not support information in the audit report.

The objective of the peer review, according to the OIG's engagement letter includes the following:
Our objective is to determine whether the DCAA’s system of quality control was suitably designed and whether the audit organization is complying with its quality control system to provide it with reasonable assurance of conformity with the applicable professional standards. Government Auditing Standards require that an audit organization performing audits in accordance with Government Auditing Standards have an appropriate internal quality control system and undergo an external quality control review every three years by an organization that is independent of the organization being reviewed. We will review individual audits from DCAA headquarters and field offices, as well as internal quality assessment activities necessary to meet the review objectives. We will use the CIGIE Guide for Conducting Peer Reviews of Audit Organizations of Federal offices of Inspector General. 
DCAA is, of course, hoping the next peer review will result in an improvement from its last peer review. The Agency has certainly worked hard to improve its quality control systems and compliance with applicable policies and procedures. Perhaps now that a lot of the adverse publicity that has tailed DCAA for the past few years has diminished, the OIG can be more objective in its peer review.

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