DCAA – Fort Walton Beach Branch Office 13 Kelly Avenue Suite 1 Fort Walton Beach, FL 32548 850-302-0180

Topics to Discuss Organization Profile DCAA Mission Statement Agency Priorities/DCAA Strategic Plan GAGAS Independence Contracting Officer Assistance 2

DCAA Organization Profile At the start of FY 2011, DCAA had approximately 4,700 employees and 112 FAOs The workforce has two components: Auditors (85 percent) and professional support staff (15 percent) Most of the auditors are assigned to an FAO or sub-office About 28 percent of the auditors are Certified Public Accountants and about 29 percent have advanced degrees 6

DCAA Organization Profile (Cont.) Our aim is to continue to ensure that contracting officers are provided with: high quality and timely audit reports, advice, and negotiation support to establish fair and reasonable contract prices. Also, to make sure that during contract performance, DCAA auditors continue to verify that results and outputs of contractor business systems comply with applicable rules, regulations, and contract terms and, as necessary, recommend recovery of contractor overbilling. 7

Defense Contract Audit Agency Mission Statement The DCAA, while serving the public interest as its primary customer, shall perform all necessary contract audits for the Department of Defense 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. 8

Agency Priorities Strengthen DCAA’s Talented Workforce Deliver High Quality/Timely Services and Products Requirements/Workload and Resources Support Overseas Contingency Operations New Business System Rule Improve Communications and Working Relationships with Stakeholders 9

Incurred Cost Backlog DCAA developed a risk-based approach to working down backlog in a efficient manner: Proposed increase staffing Dedicated audit teams (FAO Manager, Supervisors, and auditors) Revising guidance to perform audits covering multiple contractor years in a single assignment at certain contractor locations Developing revised incurred cost audit programs Delivering an incurred cost auditing refresher training course Continue working with DoD on strategies to better align the limited DCAA resources to the higher risk contracting areas

Contractor Business Systems The interim Business System Rule was issued on May 18, 2011 Defines contractor business systems as the contractor’s Accounting System Estimating System Material Management and Accounting System (MMAS) Purchasing System Property Management Earned Value Management System (EVMS) Includes a contract clause that requires the contracting officer to apply a percentage of withhold when a contractor’s business system contains a significant deficiency 15

Contractor Business Systems DCAA will report on compliance with the criteria in DFARS DCAA Reports will identify significant deficiencies – defined by the interim Business System Rule as: Shortcomings in the system that materially affects the ability of officials of the DoD to rely upon information produced by the system that is needed for management purposes 16

Contractor Business Systems Contracting Officers will use DCAA’s report in making an initial determination that significant deficiencies exist The Contractor has 30 days to respond in writing to the initial determination The C.O. will evaluate the Contractor’s response and make a final determination as to whether significant deficiencies exist. This final determination will be provided to the Contractor in writing. If the C.O. determines there are significant deficiencies, the final determination will include a notice to withhold payments. 17

DCAA Strategic Plan Strategic Plan Goal 4: Effective working relationships with DCAA external stakeholders Objective: Increase coordination and communication with the acquisition community to gain a better understanding of each other’s requirements. Strategies: Establish action plans that require regular and recurring briefing sessions with the acquisition community. Determine through an annual survey the requirements of the acquisition community, level of knowledge about DCAA initiatives/products/services, degree of satisfaction with these services, and develop a follow-up action plan to address areas that require additional improvement based on survey results. As of April 2009 25 new FAOs have been created. 19

DCAA Strategic Plan Strategic Plan Goal 4: Effective working relationships with DCAA external stakeholders Strategies (Cont.): Identify communication processes that can be used to: Promptly identify inadequate contractor submission/assertions. Reinforce benefits of open and constant communication with the acquisition community during the audit in order to deal with ongoing issues. Inform auditors of results of leadership meetings and surveys so they understand customer requirements, concerns, and priorities. Convene an Agency-wide Quality/External Stakeholder Conference to highlight the coordination and improvement of DCAA external stakeholder relationships, showcase DCAA’s organizational vision, goals, and mission, and obtain feedback on attendees’ experience with DCAA. As of April 2009 25 new FAOs have been created. 20

GAGAS Independence 3.03 Auditors and audit organizations must maintain independence so that their opinions, findings, conclusions, judgments, and recommendations will be impartial and viewed as impartial by objective third parties with knowledge of the relevant information. 21

GAGAS Independence 3.03 Auditors should avoid situations that could lead objective third parties with knowledge of the relevant information to conclude that the auditors are not able to maintain independence and thus are not capable of exercising objective and impartial judgment on all issues associated with conducting the audit and reporting on the work. 22

Defense Contract Audit Agency Additional information on DCAA and Points of Contact available at www.dcaa.mil