Surviving a DCAA audit.(Defense Contract Audit Agency)(National Association of Credit Management)(Department of Defense)

Company personnel involved in getting and executing contracts awarded by the U.S. Department of Defense need to know about DCAA audits. DCAA stands for the Defense Contract Audit Agency. The Government Business Group (GBG) of NACM hosted a teleconference on the subject July 13, entitled, "Surviving a DCCA Audit," presented by Beverly Arviso, CPA, CPCM, CFCM. Ms. Arviso has extensive experience working with, administering and auditing government contracts and is a partner in the accounting and financial consulting firm of Cherry, Bekaert & Holland, L.L.P. (CB&H).

Arviso pointed out that the U.S. government has the right to inspect your plant and audit your records, even if you're a subcontractor of a contracting company. Even companies awarded a sole-source, competitive firm, fixed-price contract may be audited if auditors believe the price established is not fair and reasonable. She noted that there are pre-award and post-award audits that can be conducted by DCAA. A pre-award audit can examine the officers' ability to perform the contract and may look at such things as the organization chart and direct rates, among other issues. Other possible pre-award audits included a financial capability audit and a price proposal audit, to determine if the way the price was determined was fair. Arviso advised those put on notice by DCAA that they will be audited will be sent a list of information that should be made available at the time of the audit.

Post-award audits include a billing system audit, incurred cost submission audit and an audit ...