The following blog is an article taken from our recent ReliAscent Quarterly Newsletter (Volume 5, Issue 3), published last week.Read More
DCAA Compliance Blog
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There has been a trend in the last 5 years that the DCAA is auditing fewer of the annual Incurred Cost Proposals (ICP's). This is based on the shear backlog as well as the risk factor to the government. Small firms are less risk and therefore fewer of their ICP's are being audited. As we all learned in physics class, for every action there is an equal and opposite reaction. In this case it looks like the reaction means there will be much more scrutiny on invoices and vouchers. We have learned that there has been a recent DCAA wide training relative to how to monitor vouchers and scrutinize them more closely. We have noticed that this is translating into more requests from auditors relative to the vouchers than ever before. Good advice to contractors at this point is to scrutinize the invoice thoroughly prior to submitting it. Math errors will raise a red flag and draw attention. This attention could then uncover other issues. Not only are math errors red flag warnings, but wrong attachments or incomplete attachments can cause a flag to go up. Also, carefully check calculations to make sure they are correct and have the proper basis.Read More
The Defense Contract Audit Agency was created in 1965 to help the Government assure that they are making the best use of taxpayer dollars on the contracts they enter into. As a result, they have been auditing contractors ever since for the Department of Defense (DoD) and even some other Government Agencies. Their audit services have grown to include all kinds of business system audits from Floorcheck Audits (timekeeping function) to full financial system audits. Last year the results of the DCAA were staggering, according to director Pat Fitzgerald:
It is surprising to me how the word audit can create such fear in people. I think either a previous bad experience or just hearing of someone else having a bad experience in an audit probably fuel that fear. Also, the conventional wisdom about IRS audits don’t help give the word a positive feel. I don’t think that an audit needs to be such an anxiety problem, if properly prepared for. Specifically, I want to talk about a DCAA Audit here. We have talked about this in the past in some of our blogs, and even have several tools on the website to help people prepare for this. I thought today we can expound on this to try and resolve or reduce some of the fear associated with the word itself.
Earlier this year I was asked to participate in a webinar to cover the difference between the DCAA and the DCMA as well as describe what each agency did. The audience was a group of companies that were Small Business Innovation Research (SBIR) award winners. I think this may get confused for a number of people that do business with the Federal Government and so worth a little time today to discuss. Both of these agencies originate from the Department of Defense and are primarily concerned with helping the Department of Defense handle their contracting business. So what are the differences?