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 the Full Blog Here
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Over the last couple of years the DCAA has increased it's focus on auditing Incurred Cost Proposals. This has resulted in some companies getting involved with the DCAA auditing ICP's as much as 6 or 7 years old. I don't know about you but I have a hard time remembering last week, let alone 6 years ago. This certainly causes a problem in contract close-outs since the ICP must be accepted in order to true up the indirect billing rates on a cost type contract. There are some new directives that may help relieve some of this situation for the small business.