Presentation on theme: "Closeout (Preparing for the End). Accounting System and Internal Controls should be addressed before you get off the ground."— Presentation transcript:
Closeout (Preparing for the End)
Accounting System and Internal Controls should be addressed before you get off the ground
Pre Award Effective Contract Closeout can only be achieved if Closeout is made a major part of the pre award process. OMB A-133 DHHS/Navy Rate Agreements DCAA Audit Cognizance SF 1408
Pre Award (OMB A-133) Who are the most common recipients of cost reimbursement contracts? An audit made in accordance with this part shall be in lieu of any financial audit required under individual Federal awards. https://harvester.census.gov/fac/dissem/acce ssoptions.html https://harvester.census.gov/fac/dissem/acce ssoptions.html
Pre Award (OMB A-133) Review prior to award to: Ensure no major issues Modify language of contract to protect your interests for any historical findings.
Pre Award (Rate Agreements) Most commonly include 3 types of rates Predetermined/Fixed Provisional Finalized
Pre Award (Rate Agreements) Predetermined/Fixed rate means an indirect cost rate, applicable to a specified current or future period, usually the organization's fiscal year. The rate is based on an estimate of the costs to be incurred during the period. A predetermined rate is not subject to adjustment.
Pre Award (Rate Agreements) Provisional rate or billing rate means a temporary indirect cost rate applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs on awards pending the establishment of a final rate for the period.
Pre Award (Rate Agreements) Final rate means an indirect cost rate applicable to a specified past period which is based on the actual costs of the period. Need to obtain and negotiate adjusting rate invoice. For multiyear contracts you may do this while contract is active
Pre Award (SF 1408)
Pre Award (T&M Contracts) Non-labor items constitute a cost type contract. Direct costs are made to a third party and easily supported. The indirect costs are the largest exposure Double Counting Cost Plus a Percentage of Cost CAS
Contract Closeout (Post Award)
Post Award (OMB A-133) OMB A-133, Audits are conducted annually. Reports must be reviewed during the life of the contract to determine if any stated findings have impact. Unlike the pre-award review the current contract may be traced by CFDA (Catalog of Federal Domestic Assistance) NUMBER.
Post Award (OMB A-133) DOE is CFDA #81 https://www.cfda.gov/
Post Award (Rate Agreements) Most DHHS/Navy agreements include predetermined rates for a finite period and then provisional rates until amended. OMB A-21 states where Predetermined/fixed rates are used the rates at the date the contract was awarded takes precedence. However if the rate is provisional it may be adjusted to prevent significant imbalances at the end of the contract
Post Award (SF 1408) Need to consider an interim audit Factors for this are: Amount of monetary Risk Risk from significant fluctuation in rates Current developments in the industry Current developments for the contractor
Post Award (T&M Contracts) Monitor current events to determine if the non labor cost burden is fairly consistent with current documentation (such as DCAA audits) to ensure that a significant adjustment to reconcile the billing rate with actual costs does not occur. Under billing may require adjustment at the end that may erode completion efforts. Over billing may require collections from vendors.
Post Performance (OMB A-133) Reports must be reviewed during the life of the contract to determine if any stated findings have impact. The impact of any findings must be quantified and a claim developed.
Post Performance (Rate Agreements) If the rates used during the life of the contract are predetermined/fixed no adjustment is required. If provisional rates were used anytime or on any element included in the contract, final rates must be obtained and are used to calculate the amount of the final claim.
Post Performance (SF 1408) Because of the lengthy incurred cost audit process FAR part offers a “Quick Close” potential if: (1) The contract, task order, or delivery order is physically complete; (2) The amount of unsettled direct costs and indirect costs to be allocated to the contract, task order, or delivery order is relatively insignificant. Cost amounts will be considered relatively insignificant when the total unsettled direct costs and indirect costs to be allocated to any one contract, task order, or delivery order does not exceed the lesser of— (i) $1,000,000; or (ii) 10 percent of the total contract, task order, or delivery order amount;
Post Performance (SF 1408) The contracting officer performs a risk assessment and determines that the use of the quick-closeout procedure is appropriate. The risk assessment shall include— (i) Consideration of the contractor’s accounting, estimating, and purchasing systems; (ii) Other concerns of the cognizant contract auditors; and (iii) Any other pertinent information, such as, documented history of Federal Government approved indirect cost rate agreements, changes to contractor’s rate structure, volatility of rate fluctuations during affected periods, mergers or acquisitions, special contract provisions limiting contractor’s recovery of otherwise allowable indirect costs under cost reimbursement or time-and-materials contracts; and (4) Agreement can be reached on a reasonable estimate of allocable dollars.
Post Performance (T&M Contracts) Develop sources for actual cost data, such as incurred cost audits, and reconcile with costs billed to generate a claim.