How to Deal with DCAA Auditors

Transcription

1 How to Deal with DCAA Auditors Breakfast Seminar March 13, 2014 Copyright 2014 Rubino & Company, Chartered

2 Presenter: Paul H. Calabrese Rubino & Company, CPAs & Consultants Senior Manager Tel: Copy of this presentation: 2

3 Overview Know your contract mix Know type of audits for contract mix Know level of exposure from DCAA audits How to prepare for DCAA Understand what motivates DCAA Best practices in interfacing with DCAA 3

4 Contract Mix What are your contract types? Federal Cost reimbursable Time and material Fixed price Special Federal GSA Schedule FAR Part 12 4

5 Contract Mix Federal Negotiated RFP CAS Covered / TINA FFP FAR Part 15 Adequate Price Competition FAR Part 15 Certificate of Cost/Pricing Data FAR Table , Table 15-2 Sealed Bid IFB Commercial 5

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7 CPFF Risk CPFF has high risk of non-compliance Additional specialized Procedures Accounting system requirements SF 1408 Timekeeping labor distribution Job cost software run indirect rates FAR Part 15 proposal preparation FAR Part 31 cost principles unallowable cost CAS consistency / uniformity Increased DCAA audit scrutiny / gov t oversight by ACO - DCMC 7

8 Risk of Firm Fixed Price (FFP) Higher risk to perform under price limitations, i.e. must complete work even if loss position Negotiated FFP are subject to post award audits for defective pricing FFP less risk than CPFF T&M risk is in between FFP and CPFF 8

9 How to Prepare for DCAA Develop system of internal controls Due a self-test, kick the tires, training Documentation, adequate support Effective compliance is expensive $$$$$ DCAA ICE and proposal checklists FAR assessment and ICQ checklist SF 1408 accounting system checklist DCAA Pamphlet: Info for Contractors 9

10 What Motivates DCAA Large government contracts with large dollar questioned cost, high risk to government DCAA is more aggressive Small government contracts have little risk to the government DCAA less aggressive DCAA s concern: shift cost from fixed price contract in loss position to a cost reimbursable contract that has unused funds 10

11 What Does DCAA See Thru Their Lens If they are auditing a fixed price contract for Termination for Convenience Request for Equitable Adjustment Post Audit Defective Pricing Review DCAA views EVERYTHING (every type of audit) as though it is cost reimbursable 11

12 Interfacing with DCAA Auditors Know the value of being proactive Stayed involved throughout the audit Importance of entrance and exit conferences Ask questions Try to obtain draft reports if DCAA has concerns Try to obtain audit reports via FOIA 12

13 Psychological Factors Intuition Auditor is overly excited Auditor is overly quiet Auditor s body language Observation Audits with no findings are resolved quickly, audits that are not take a longer time Auditor is spending lots of time on one issue Auditor asks lots of questions and does not move on to other matters 13

14 Inexperienced Auditors Know the rules but don t have experience understanding what is significant and what is not significant Supervisors have to take auditor s findings seriously Once the auditor drafts a finding, even if it is wrong, they will not retract the finding Be careful what you say, it may wind up in an audit report 14

15 Best Practices Assign one person to interface with DCAA to ensure no conflicting information Do not be disrespectful with DCAA Explain the basis of your position Ask if the auditor s supervisor can be included in the discussion of a finding Be prepared with documentation Be responsive with supporting documents 15

16 Best Practices Keep a copy of records provided to auditor If an auditor continues to focus on a particular matter, try to dialogue with the auditor to understand and allay their concerns Ask the auditor as to their progress and address problems immediately Inquire if the auditor still has concerns after you answered question / provided documents 16

17 Any Questions 17

18 The materials contained herein or discussed in the seminar or shown in the MS Powerpoint slides, are for illustrative and academic purposes only and should not be considered appropriate for your organization without careful adaptation by experts in the appropriate field of endeavor. DISCLAIMER