Guest Post: Craig Stetson CPA, CGMA – Partner – Capital Edge Consulting
The Defense Contract Audit Agency (DCAA) recently indicated as a 2019 agency initiative a significant increase in their 2019 audit efforts around contractor business systems. The DCAA’s renewed focus on performing contractor business system audits, is largely the result of the DCAA’s recent reduction in its prior and long-standing backlog of incurred cost proposal audits. The DCAA is responsible for oversight of three of the six contractor business systems, including accounting, estimating, and material management and accounting. Under this 2019 initiative, the accounting system will be the primary focus with a planned audit activity of nearly 1,000 audits.
Estimating and material management and accounting system audits are planned to increase significantly from the 2018 activity, however, nothing near the planned accounting system amount noted prior.
The DCAA’s 2019 plan to significantly increase their audits of contractor business systems appears aggressive (considering the level of effort required to perform these audits and the level of available DCAA resources). Contractors should take seriously potential or pending business system audits by the DCAA as the consequences for the determination of inadequacy by the government may be significant and include: 1) Monetary withholds pursuant to DFARS clause 252.242-7005, 2) Loss or delay of contract awards, 3) Reduced proposal evaluation scores in accordance with solicitation evaluation criteria (for example, Request for Proposal Section M), 4) Increased government oversight across multiple fronts, and 5) Government CPARS (Contractor Performance Assessment Reporting System) recording of detrimental past performance ratings.
Join Craig Stetson himself in a webinar hosted by Federal Publications Seminars, and sponsored by JAMIS Software Corporation this Wednesday, May 22nd at 12pm Eastern Time. Mr. Stetson will discuss five key strategies that are critical risk mitigation measures to enhance the likelihood of the government determining contractors’ business systems adequate and reduce contractors’ related compliance risks. REGISTER HERE >
Or read the full Capital Edge Consulting white paper on the topic here: READ MORE >