Whitepaper: The Audit World's Biggest Myths
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Our DCAA Audit Services are designed to assist government contractors with comprehensive DCAA audit preparation and DCMA audits. Companies working on or pursuing U.S. federal government contracts are subject to extensive oversight from various government agencies. These oversight activities can range from routine DCAA audits and DCMA reviews of a contractor’s financial and accounting data to specialized investigations triggered by specific concerns.
At Capital Edge, our experienced DCAA compliance consultants provide the support you need to navigate these audits and reviews successfully.
The government agencies involved in these oversight activities are outlined below. Each has its own objectives and may require a tailored approach to ensure compliance and effectively address the government’s oversight purposes.
At Capital Edge, we specialize in ensuring DCAA compliance for businesses engaged in defense contracting. Our team of experts provides comprehensive support and guidance in navigating the complexities of DCAA regulations. We assist in establishing and maintaining compliant accounting systems, enforcing rigorous timekeeping practices, and implementing proper cost allocation methods that meet DCAA standards.
Our services go beyond compliance assistance by equipping your staff with the necessary training to understand and effectively implement DCAA requirements. With Capital Edge, you gain a proactive partner committed to minimizing audit risks and enhancing your company’s ability to secure and manage government contracts successfully.
We provide full-scale DCAA audit support to ensure your business remains compliant with government regulations. Our services cover audit preparation, ensuring compliant accounting systems, and offering defense throughout the audit process. With our expert guidance, you can confidently manage DCAA audits and maintain your government contracts efficiently. Contact us today for customized DCAA audit support solutions.
A DCAA audit is a review of a contractor's financial representations to determine whether costs are reasonable and comply with contract terms and government regulations. These audits are typically initiated by a contracting officer or an administrative contractor who requires audit services to support decision-making or meet regulatory compliance needs. Importantly, the Defense Contract Audit Agency (DCAA) does not conduct audits requested by contractors themselves. Instead, a DCAA audit is only performed when a federal agency requests it or there is a demonstrated need for audit services.
In the world of government contracting, a DCAA audit is not a one-size-fits-all process. There are several types of audits designed to address various accounting scenarios that contractors might encounter. Each DCAA audit is tailored to specific circumstances, ensuring compliance with government regulations. Some of the most common DCAA audits include:
Capital Edge offers comprehensive DCAA Audit Services to assist contractors in responding to, managing, and resolving the government's broad oversight activities. Our contract compliance audit services are designed to help contractors navigate the complexities of both DCAA audits and DCMA audits.
Here are the latest questions being asked about DCAA Compliance
Yes, in response to the increase in Work at Home (WAH) employees, the DCAA is conducting virtual floor checks.
A virtual floor check (or floor check by phone) slightly alters the traditional DCAA approach. Typically, floor checks are meant to be unannounced in order to interview employees in an "uncoached" manner. However, with the rise in WAH activity, it is likely that comprehensive virtual floor check audits will be limited under the current conditions.
A key activity contractors are engaging in to prepare for a business system audit is conducting a mock audit or performing other forms of self-assessment before the actual audit begins. The goal of a mock audit or self-assessment is to evaluate whether the current internal controls are functioning effectively and to identify any compliance gaps.
When gaps are discovered, contractors can develop and implement corrective action plans. This preparation process also demonstrates the required monitoring function that is part of a compliant business system and may serve as an effective element of the system demonstration provided to the DCAA during the early stages of the audit.
Yes, the DCAA is actively auditing contractors who have received funds under the CARES Act. The DCAA has developed two new audit objectives related to this legislation. Given that the CARES Act and its impact on government contractors are relatively recent, these audit objectives and procedures are still evolving.
Currently, the DCAA is focusing on two key areas:
Forgiven Loans Under the Paycheck Protection Program (PPP): The Department of Defense (DoD) and DCAA position is that forgiven PPP loans must be treated as credits under FAR 31.201-5. This means that contractors with cost-reimbursement contracts may need to credit applicable portions of the forgiven loan proceeds back to the government.
Requests for Equitable Adjustments (REAs) Under Section 3610 of the CARES Act: The DCAA is developing audit procedures for contractors submitting REAs under Section 3610. Contractors will need to provide detailed supporting documentation for reimbursement requests and should adhere to the published DoD guidance.
To assist the DCAA with their pre-audit risk assessment, contractors can take several key steps that may increase the likelihood of a low or medium risk determination:
Provide Timely and Thorough Responses: Ensure that responses to the DCAA's initial requests for information are both timely and thorough. Responses should directly address the DCAA's specific questions or requests, demonstrating how the information satisfies the relevant compliance requirement or audit objective.
Submit Relevant Written Documentation: Contractors should identify and submit written documentation that illustrates the use and effectiveness of key internal controls. This may include policies, procedures, process flows, or other relevant materials.
Demonstrate Business System Processes: Offer a comprehensive business system demonstration or walkthrough. This should cover the processes, procedures, and internal controls that apply to the main components of the business system.
In simple terms, the Defense Contract Management Agency (DCMA) is responsible for contract management, while the Defense Contract Audit Agency (DCAA) focuses on accounting and financial oversight.
The DCMA ensures that government contracts are executed in accordance with terms and conditions, monitoring contractor performance, quality assurance, and delivery timelines. On the other hand, the DCAA performs audits to ensure that costs and expenditures submitted by contractors comply with government regulations and contract requirements.
Capital Edge government contract consultants support Government Contractors and Federal Grant Recipients. Our consultants specialize in the regulatory compliance matters you need.
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