DCAA Initiatives/Current Issues

Transcription

1 Defense Contract Audit Agency DCAA Initiatives/Current Issues Maryland Association of CPAs 2010 Government Contractors' Conference September 21, 2010 Kenneth J. Saccoccia Assistant Director Policy and Plans 1 Defense Contract Audit Agency New Mission Statement The DCAA, while serving the public interest as its primary customer, shall perform all necessary contract audits for the Department of Defense and provide accounting and financial advisory services regarding contracts and subcontracts to all DoD components responsible for procurement and contract administration. These services shall be provided in connection with negotiation, administration, and settlement of contracts and subcontracts to ensure taxpayer dollars are spent on fair and reasonable contract prices. DCAA shall provide contract audit services to other Federal agencies, as appropriate. 2

2 DCAA Organization Internal Review Karen Cash Director Patrick Fitzgerald Deputy Director Frank Summers Executive Officer Joe Garcia General Counsel Defense Legal Service John Farenish Dep. Assist. Directors Operations Pat Letzler Nina Kissinger Headquarters Regions Assistant Director, Policy & Plans Ken Saccoccia Assistant Director, Resources Philip Anderson Assistant Director, Integrity & Quality Assurance Don McKenzie Central Region Ed Nelson Tim Carr Eastern Region Paul Phillips Gary Spjut Northeastern Region Ron Meldonian William Adie Mid-Atlantic Region David Eck Steve Hernandez Western Region Don Mullinax Susan Barajas Field Detachment Tom Peters Terry Schneider 3 Regional Boundaries Afghanistan Br European Br 3 Iraq BO R R R 3 Pacific Br R 6 2 R No. of Field Audit Offices Eastern Northeastern Central Mid-Atlantic Western 20 FD 11 2 R = Regional Office 4

3 Staffing FY 2006 FY 2007 FY 2008 FY 2009 Total (End Strength) 4,056 4,124 4,216 4,317 Auditors 86% 86% 86% 87% College Graduate (Auditors) Advanced Degrees (Auditors) CPAs (Auditors) 99% 99% 99% 99% 25% 26% 26% 29% 37% 35% 33% 30% 5 Agency Priorities Strengthening DCAA s Talented Workforce Delivering High Quality Services and Products Requirements/Workload and Resources Supporting Overseas Contingency Operations Improve Communications and Working Relationships with Stakeholders 6

4 High-Quality Services and Products Quality Services & Products are non-negotiable A DCAA Audit Must Be: Performed in accordance with GAGAS Perform sufficient testing Complete approved audit program steps Document completion of audit steps and conclusions reached Meaningful, Relevant, and Timely Independent and Objective Executed on a Risk Driven Basis Audit Process Actions Implemented to Improve the Quality of Audits Proposal walk-through & early identification of inadequacies Enhanced HQs and regional support Emphasis on collaborative approach Pilot testing independent referencing 7 High-Quality Services and Products Developing Short and Long-Term Strategies to Eliminate Obstacles Preventing the Delivery of High- Quality Services/Products Authorized additional management/supervisory position to allow more time on audits Initiated Raytheon CAC pilot project Re-visiting delegation of signature authority Empowering Regions/FAOs to develop practices to build in quality up front 8

5 Communications and Working Relationship Mutually Beneficial Relationships No Surprises More Frequent Communication Sufficient Lead Time for DCAA Services and Products Timely Access to Records Responsive and Timely Services to Agency Stakeholders Obtaining Adequate Contractor s Assertions DPAP 12/4/2009 Memorandum Resolving Contract Audit Recommendations Developed Rules of Engagement 9 Defense Contract Audit Agency DCAA Rules of Engagement 10

6 DCAA Rules of Engagement Issued guidance on establishing open and effective communications with all stakeholders Audits must be in compliance with GAGAS and timely and responsive to the requestor s needs Rules will cover communications during each phase of the audit: Establishing the engagement Entrance conference During the audit Exit conference Post report issuance Negotiations 11 Highlights of Rules of Engagement Hold discussions with requestor before beginning the audit to identify specific areas of concern All parties participate in contractor walk-through of proposal During the audit Keep stakeholders informed of major audit issues Timely notification of required extensions Status of audit communicated clearly Include contracting officer in exit conference 12

7 Highlights of Rules of Engagement Post report issuance - auditors should provide assistance as needed for contracting officer to understand the audit conclusions and rationale. Assistance should include: Answering questions on audit findings Attending negotiations Attending DCMA Boards of Review 13 Defense Contract Audit Agency DCAA Policy Initiatives/Current Issues 14

8 Access To Records & Contractor Personnel Access to Contractor Records Timeliness Readily available Includes access to contractor personnel 15 Guidance on Budgetary Data Supporting Forward Pricing Rates 10-PSP-021(R), dated August 24, 2010 Clarifying guidance on the expectations regarding the contractors use and extent of budgetary data in support of forward pricing rates. FAR Part 15, Table 15-2 II C provides that the contractor must indicate how they computed and applied indirect rates while also showing trends and budgetary data with appropriate explanations to support the reasonableness of the proposed rates. The extent of detail will vary depending on the specific data supporting each Fiscal Year and based on the size and complexity of the contractor. Auditors will perform substantive procedures to evaluate the reasonableness of the basis of estimate (e.g., budgetary data and historical costs/trends). When the basis of estimate is historical data, auditors will perform substantive procedures to ensure the historical data is in reasonable compliance with FAR Part

9 Audit Guidance on Review of Dependent Health Benefit Costs MRD 09-PSP-016(R), dated August 4, 2009 Costs for health insurance premiums and claims for ineligible dependent are unallowable in accordance w/ FAR (m)(1), Compensation for Personal Services, Fringe Benefits Auditors should ensure contractors have adequate procedures governing employee/dependent eligibility and payment of insurance claims and premiums Failure to have adequate control procedures over employee benefit costs should be reported as an Internal control deficiency in the contractor s accounting system CAS 405 noncompliance, if CAS covered 17 Audit Guidance on Approving and Rescinding Contractor s Authorization for Direct Billing Program MRD 09-PPD-006(R), dated April 15, 2009 If a billing system has been significantly modified or a new system has been implemented, the following steps should be taken: Auditors should immediately provide verbal and written notification to the appropriate contractor level (e.g., the Chief Financial Officer) that their authorization to participate in the Direct Bill Program will be rescinded in 30 days. FAO should ensure that it has a documented sampling plan and procedures for reviewing a sufficient number of public vouchers as part of its review plan. 18

10 Guidance on Performing Internal Control Follow-Up Audits 10-PAS-005(R), dated February 18, 2010 Follow-up audits of contractor correction of previously-reported deficiencies will be performed When notified by the contractor or ACO that appropriate corrective actions have been implemented and Sufficient transactions are available to test testing should include transactions over several cycles As the audit scope is limited the report opinion will only address whether deficiencies have been corrected not the adequacy of the system 19 DCAA/DCMA Coordination DCAA & DCMA Directors issued a jointly signed memorandum to all DCAA/DCMA employees Expressing a shared commitment to ensure fair and reasonable contract values for the warfighter, taxpayer, and Department of Defense Emphasizing that success is based on working together while respecting the independence and professional expertise found in the workforce of each Agency Expecting auditors and contracting officers to establish appropriate working relationships and lines of communication for resolution of issues 20

11 Panel on Contracting Integrity Subcommittee on Contractor Business Systems Subcommittee established to address issues raised by the Commission on Wartime Contracting - to improve the effectiveness of DOD s oversight of contractors business systems Comprehensive review of current policy, processes, and practices regarding contractor business systems Subcommittee will assess regulations/acquisition policy (e.g., FAR, DFARS, PGI) and its coverage for business systems DPAP will chair subcommittee with DCAA, DCMA, and Services participation 21 Rules on Contractor Business Systems Proposed DFARS Business System Rule (issued on 1/15/2010) Contractor business systems and internal controls - the first line of defense against waste, fraud, and abuse Business systems defined as accounting, estimating, purchasing, EVMS, MMAS, and property management systems Objective of rule: To define and establish specific criteria for each contractor business system and implement compliance mechanisms to improve DoD oversight Contract clause provides for the contracting officer to apply a percentage withhold when a contractor s business system contains deficiencies 22

12 More Information on DCAA DCAA Points of Contact, Audit Office Locator, Audit Guidance Memorandums and Contract Audit Manual (CAM) are available on DCAA s web site at: Discussion 23