Behind the Scenes of a DCAA Audit and what it means for Government Contractors

by | Feb 5, 2015 | Accounting

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Government contractors are governed by an agency that is under the umbrella of the Department of Defense. This agency is partially responsible for conducting random audits to assure that the contractors are within compliance of government standards. It is essential that contractors understand the concept of the audit and a few points that surround the conditions of the audit as well. In basic terms, DCAA audits are advisory presentations that work to offer an option to the contracting officer. It is up to the contracting officer to respond to the findings of the audit at his own discretion. There are cases when the DCAA has authority as well and a business advisory service can help contractors to distinguish when this is the case. The DCAA acts primarily as an independent auditing firm but it holds a responsibility to the government agency that requests the audit or awards the contract.

Audit Categories

DCAA conducts various types of audits and many are initiated on larger contract types. There are some that small business Rockville contractors are subjected to as well. Common audits that small businesses face include pre and post award accounting systems, incurred cost, internal controls and business systems, price proposal audits and sometimes audits regarding invoices of the contractor. These categories vary greatly and all seek different information regarding the actions or performances of the contractor but they are all very important in regards to compliance. Contractors must take a direct approach to audit cooperation and response. Failure to do so could lead to negative impact and impositions by the government.

Success Maximization

There are steps to be taken to help contractors maximize the success rate of the DCAA audit in Rockville. First and foremost, the contractor must be properly prepared. The preparation process should be a consistent effort and not only implemented when the audit is expected. Too many contractors wait until the auditor is onsite and ready to begin before reacting and this is never a good plan. It can cause negative tension that puts the contractor in a defensive position which never leads to a positive outcome. It’s best for the contractor to utilize the expertise of business consultants to help them ace the audit. Most of these professionals are aware of how the audit works and what leverage the contractor has throughout the process.

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