Professional Services Council

February 25, 2009

April G. StephensonDirector

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Director’s PhilosophyDirector’s Philosophy

Quality audits must not be sacrificed for any reason Continuous Process Improvement Efficient & effective accomplishment of DCAA mission

Audits to ensure that the Government pays a fair and reasonable price for goods and services

Back to BasicsNeed to understand what you are auditingFace-to-face communication with the contractor

employees Ask questions, maintain auditor skepticism Develop sound conclusions

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DCAA Initiatives/Current IssuesDCAA Initiatives/Current Issues

Audit Guidance on Denial of Access to Records Due to Contractor Delays

Audit Guidance on Significant Deficiencies/ Material Weaknesses and Audit Opinions on Internal Control Systems

Audit Guidance on Limited Scope Audit Reports on Internal Controls

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Audit Guidance on Denial of Access to RecordsAudit Guidance on Denial of Access to RecordsDue to Contractor Delays Due to Contractor Delays

MRD 08-PAS-042(R), dated December 19, 2008MRD 08-PAS-042(R), dated December 19, 2008

Reason for guidance memo - remind auditors of expectations for access to contractor records and personnel

Expectations Quality and effective audits require timely

access to records. Documentation supporting the contractor’s

assertion should be readily available and provided upon request.

Address some contractors use of “slow roll” response to data.

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Audit Guidance on Denial of Access to RecordsAudit Guidance on Denial of Access to RecordsDue to Contractor Delays Due to Contractor Delays

MRD 08-PAS-042(R), dated December 19, 2008MRD 08-PAS-042(R), dated December 19, 2008

Expectations (cont.) Supporting documentation includes access to

personnel. Auditors should generally obtain support directly

from the person responsible for the information. If Denial of Access to Records

Elevate issue in writing to higher level management – if not resolved.

Suspension or withhold costs and question the unsupported costs in the audit report, as appropriate.

If still not resolved, elevate to HQs for pursuing a subpoena.

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Audit Guidance on Audit Opinions on Internal Control SystemsAudit Guidance on Audit Opinions on Internal Control Systems MRD 08-PAS-043(R), dated December 19, 2008MRD 08-PAS-043(R), dated December 19, 2008

Reason for change in guidance – Ensure significant deficiency in contractor system

is identified and addressed/corrected in a timely manner

Eliminate confusion on inadequate-in-part opinion and suggestions for improvement

Expectations Audits of contractor internal controls are only

performed at large contractors where deficiencies are significant

Clarify that a deficiency is a deficiency – no reason for inadequate-in-part opinion under the FAR or GAGAS

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Audit Guidance on Limited Scope Audit Reports on Audit Guidance on Limited Scope Audit Reports on Internal ControlsInternal Controls

MRD 08-PAS-041(R), dated December 19, 2008MRD 08-PAS-041(R), dated December 19, 2008

Reason for change in guidance – significant deficiencies identified in other than internal control audits could take several years to report depending on the audit cycle Results in more expeditious reporting of deficiencies Results in more timely correction by contractors

Expectations Issue a flash report when condition found (no change); Establish separate limited scope audit to review control

activities related to the control objective; and If control activities audited are not adequate to assure

control objectives are accomplished, report the system as inadequate.

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More Information on DCAA

DCAA Audit Guidance Memorandums and Contract Audit Manual (CAM) are available on DCAA’s web site at:

http://www.dcaa.mil

Questions?