DCAA – WHO WE ARE and WHAT TO EXPECT Laura Cloyd-Hall, Branch Manager Trista Franklin, Supervisory Auditor August 21, 2013 The views expressed in this presentation are DCAA's views and not necessarily the views of other DoD organizations

Agenda DCAA MISSION DCAA Pre-Award Audits and Non-Audit Services DCAA Post-Award Audits and Non-Audit Services DCAA Public Website

DCAA MISSION The Defense Contract Audit Agency (DCAA), while serving the public interest as its primary customer, shall perform all necessary contract audits for the Department of Defense (DoD) and provide accounting and financial advisory services regarding contracts and subcontracts to all DoD Components responsible for procurement and contract administration. These services shall be provided in connection with negotiation, administration, and settlement of contracts and subcontracts to ensure taxpayer dollars are spent on fair and reasonable contract prices. DCAA shall provide contract audit services to other Federal agencies, as appropriate.

Defense Contract Audit Agency Approximately 5,000 employees located at over 300 offices throughout the United States and overseas Responsibilities and Duties: Perform all needed contract audits for DoD Provide accounting and financial advisory services to DoD (and civilian when requested) acquisition and contract administration components during all contract phases: Pre-award Post-Award (Contract Execution) Settlement (Contract Closing)

DCAA Pre-Award Audits and Non-Audit Services Audit Services Before Contract Award Pre-Award Accounting System Survey Complete Proposal Audit Cost Realism Analysis Forward Pricing Rate Audit Non-Audit Services Before Contract Award Specific Cost Information Readily Available / On File

Audit Services Before Contract Award Pre-Award Accounting System Purpose: To determine if the design of the accounting system is considered acceptable for award of a prospective contract in accordance with the criteria contained in FAR 53.209-1(f) References: SF 1408 (FAR 53.301-1408) Audit Program 17740 Contract Audit Manual (CAM) 5-200 “Pre-Award Surveys and Adequacy of Accounting System for Contractual Requirements” Preaward Accounting System Adequacy Checklist

Audit Services Before Contract Award Complete Proposal Audit Purpose: To determine if the proposal represents a fair and reasonable price References: Adequacy FAR 15.408, Table 15-2, Walk Through Information for Contractors, Enclosure 3 Audit Program 21000 Contract Pricing Proposal Adequacy Checklist FAR 31.201 - General FAR 31.205 - Selected Costs CAM, Chapter 9, Audit of Cost Estimates and Price Proposals

Audit Services Before Contract Award Cost Realism Purpose: To determine if the proposal represents a fair and reasonable price References: Audit Program 27010 CAM, Chapter 9, Audit of Cost Estimates and Price Proposals Forward Pricing Rate Audit Purpose: To determine if the proposed rates are fair and reasonable Audit Program 23000 Forward Pricing Rate Proposal Adequacy Checklist Page | 8

Non-Audit Services Before Contract Award Specific Cost Information Purpose: To provide readily available rate information for potential contract awards falling under the DFARS, PGI 215.404-2(c) threshold References: DFARS, PGI 215.404-2(c): fixed-price proposals exceeding $10 million; cost type proposals exceeding $100 million “Readily Available” rate information is not meant as a recommendation or approval of the rates proposed, but consists solely of rate information that we have on file, whether audited or not No audit opinion – disclaimer of opinion included on confirming memorandum CAM, Chapter 9, Audit of Cost Estimates and Price Proposals

DCAA Post-Award Audits and Non-Audit Services Audit Services After Contract Award Incurred Costs / Final Annual Indirect Rates Post-Award Accounting System Contract Closings Claims/Terminations Floor Checks Labor and Timekeeping Material Purchase Consumption/Existence Truth in Negotiations Act Compliance Business System Audits Non-Audit Services After Contract Award Interim Voucher/Progress Payment Reviews

Audit Services After Contract Award Incurred Cost/Annual Indirect Rates Purpose: To determine whether costs charged to auditable Government contracts are allowable, allocable, and reasonable in accordance with the contract and applicable Government acquisition regulations Reference: FAR 52.216-7(d) Incurred Cost Electronically (ICE) Model Information for Contractors, Enclosure 6 Incurred Cost Submission Adequacy Checklist Audit Program 10100 CAM Chapter 6, Incurred Cost Audit Procedures CAM Chapter 7, Selected Areas of Cost

Audit Services After Contract Award Post-Award Accounting System Purpose: To determine if the accounting system is adequate for accumulating and billing costs on Government contracts References: Audit Program 17741 CAM 6-1007.3 “Criteria for Adequate Billing Systems” CAM 5-200 “Post Award Accounting System Audits”

Audit Services After Contract Award Contract Closings Purpose: To determine the cost and fee (or profit) payable for closing of cost reimbursement, labor hour, T&M and FPI contracts/subcontracts References: FAR 42.708 – Quick-Closeout Procedures FAR 52.216-7 – Allowable Cost and Payment Audit Program 15400 CAM 6-1009 – Processing of Completion voucher CAM 6-1010 - Quick Closeout Procedures

Audit Services After Contract Award Terminations/Claims Purpose: To determine if the proposed or claimed costs are acceptable as a basis for negotiation or settlement References: Audit Programs – 17100, 17200 CAM Chapter 12

Audit Services After Contract Award Floor Checks Purpose: To verify employees are actually at work, performing in assigned job classifications, and charging time to proper cost objectives Reference: Contractor’s own timekeeping internal controls and procedures Audit Program 10310 CAM 6-400 – Audit of Incurred Labor Costs Material Existence Purpose: To verify that purchased direct materials/services were received, needed for the contract, purchased in reasonable quantities, at a prudent price, used on the contract, and properly accorded for as to initial charge, transfer in or out, and residual value Audit Program 10320 CAM 6-300 Audit of Incurred Material Costs and Purchasing Services

Audit Services After Contract Award Truth In Negotiation Act Compliance Purpose: To determine if a negotiated contract price was increased by a significant amount because the contractor did not submit or disclose accurate, complete and current cost or pricing data Reference: Audit Program 42000 CAM 14-100 Postaward Audits of Contractor Cost or Pricing Data

Audit Services After Contract Award Business System Audits Purpose: To evaluate compliance with internal controls References: DFARS 252.242-7005 Contractor Business Systems (February 2012) Accounting Estimating DCMA reviews Purchasing, Gov’t Property, MMAS

Non-Audit Services After Contract Award Voucher/Progress Payment Review Purpose: To determine if interim vouchers are based on accounting records and met the terms of the contract References: CAM 6-1000, Responsibility for Processing and Approval of Interim and Completion Cost-Reimbursement Vouchers FAR 42.704, Billing Rates

DCAA Public Website www.dcaa.mil Information for Contractors ICE Model Audit Programs Contract Audit Manual Checklists MRDs – Audit Guidance Field Audit Office Locator

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