Government Oversight, Audit and Review Expertise
DCAA, DCMA, IG & Civilian Agency Audit Support
Companies seeking or performing under U.S. federal government contracts are subject to a wide range of oversight activities potentially performed by a host of government entities. These oversight activities may include routine audits or reviews of a contractor’s financial and accounting data or narrowly focused, specialized investigations stemming from a variety of causes.
The government agencies performing these oversight activities are grouped below as each has different objectives or agendas and may require a focused approach to respond to, support, and resolve the government’s oversight purpose.
The Defense Contract Audit Agency (DCAA) provides a variety of accounting and advisory services to assess federal government contractors’ adherence to the regulatory and contract compliance requirements associated with performance under federal government contracts. The DCAA provides these services primarily for the U.S. Department of Defense, and, upon request, to a variety of Civilian agencies. Included among the DCAA provided services:
- Initial Assessments of Contractor Accounting System Capabilities – SF 1408 Preaward Accounting System Survey Checklist
- Audits of Contractor Price Proposals
- Audits of Contractor Requests for Progress Payments
- Review of Contractor Submitted Public Vouchers
- Audit of Contractor Annual Incurred Cost Proposals
- Audit of Contractor Business Systems for Adequacy under DFARS Business Systems Clauses
- Material Management and Accounting System (MMAS)
- Audits of Contractor Compliance with the Cost Accounting Standards (CAS)
- Audits for Compliance with Truth-in-Negotiations Act Requirements
- Audits of Contractor Termination for Convenience Settlement Proposals
- Audits of Contractor Requests for Equitable Adjustment
- Performance of Labor Floor Checks
- Audits of Contractor Requests for Reimbursement under Section 3610 of the CARES Act
The Defense Contract Management Agency (DCMA) provides a variety of contract administration and contract compliance services associated with the award, management and close-out of U.S. Department of Defense contracts, including:
- Issuance of Solicitations and Contract Awards
- Negotiation and award of Contract Modifications Due to Requests for Equitable Adjustment, Terminations for Convenience, Reimbursements under the CARES Act and Various Unsettled Contracting Actions
- Assessment of Contractor Business Systems for Adequacy under DFARS Business Systems Clauses
- Purchasing (Contractor Purchasing System Review (CPSR))
- Government Property
- Earned Value Management System (EVMS)
- Resolution and Settlement of DCAA Audit Findings
- Resolution Authority to Settle Defective Pricing Matters (new as of October 1, 2020)
- Performance of Final Close-out of Contracts
- Performance of Contractor Financial Capability Assessments
- Quality Assurance and Inspection of Contractor-provided Goods and Services
Federal Agency Inspectors General (IG) provide oversight activities aimed at preventing or detecting inefficient or unlawful use of agency resources. These oversight activities frequently affect government contractors and include:
- Investigation of reported contractor code of conduct or ethics violations under contract mandatory disclosure requirements
- Assessment of government agency use of contracting methods, competition and required documentation
- Investigation of contractor requests for financial assistance and related financial reporting under major federal government stimulus or relief programs
Various federal agencies, including the Government Accountability Office and Department of Justice, conduct specialized reviews or investigations of both government agencies and government contractors alike. The nature of these reviews or investigations may vary and generally may involve:
- Assessment of federal agency adherence to procurement and contracting rules and procedures
- Assessment of federal agency use of funds and commitment in an efficient and fair and reasonable manner
- Investigation of alleged contractor wrongdoing and mischarging under federal government contracts
Have Questions or need Consulting Expertise Regarding GovCon Compliance?
Capital Edge can assist with the response to and management and resolution of the government’s broad oversight activities in many ways. Our services in this area include:
Latest Questions Being Asked About GovCon Compliance
Yes. In the current environment with an increase in Work at Home (WAH) employees, DCAA can conduct virtual floor checks
A virtual floor check, (or floor checks by phone), somewhat diminishes DCAA’s approach to floor checks. Floor checks are intended to be unannounced in order to interview an “uncoached” employee. Likely, virtual comprehensive floor check audits under the current increase in WAH activity, will be minimal.
The main activity we see is performance of a ‘mock audit’ or other forms of self-assessment prior to the start of the audit. The purpose of the mock audit or self-assessment is to determine if current internal controls are operating effectively and if compliance gaps may exist. If gaps are identified, corrective action plans may then be developed and potentially put into action.
This process demonstrates the monitoring function that is required as an element of a compliant business system and may be an effective portion of the system demonstration provided to the DCAA during the initial phases of the audit.
Yes. The DCAA has two newly created audit objectives related to the CARES Act. As the CARES Act and funds received by contractors is a relatively recent thing, these audit objectives and forthcoming procedures are evolving and under development. However, we are seeing the DCAA involved in two main areas. First, the treatment of forgiven loans received under the Paycheck Protection Program (PPP). The DoD’s and DCAA’s position is that forgiven PPP loans are to be treated as credits under FAR 31.201-5. This means that contractors with cost reimbursement contracts may be required to credit to the government applicable portions of the forgiven loan proceeds. Second, the DCAA is currently developing audit procedures related to contractors submitting REAs under Section 3610 of the CARES Act. Contractors will need to provide comprehensive supporting documentation for requests for reimbursement and should follow the published DoD guidance.
A few things are primary, and, if performed effectively should enhance the opportunity for a low or medium risk determination. First, timely and thorough responses to DCAA’s initial requests for information. Responses need to specifically address the DCAA requests or questions and demonstrate how the response satisfies the related compliance requirement or audit objective. Second, identification and submission of relevant written documentation demonstrating the use and effectiveness of key controls. Written documentation may be policies, procedures, process flows, or other material. And third, a comprehensive business system demonstration or walkthrough of the processes, procedures, and internal controls applicable to the principal components of the business system.