Innumerable companies, business firms, and individuals work in contracting relationships with the federal government. According to a DCAA audit expert, a crucial part of government contracting incorporates ensuring compliance with the regulations and standards. Specifically, contractors with the Department of Defense or DoD have to comply with the DCAA under specific regulations and standards. Here are a few other things to know about the DCAA.
The organization and its purposes
DCAA is an abbreviated
term that stands for Defense Contract Audit Agency. Founded in 1965, it’s a
federal agency that operates under the DoD. The purpose of this agency is to
provide audit and financial advice services concerning contract acquisition and
administration for the DoD and other federal departments. The DCAA operates
directly under the authority and control of the Under Secretary of Defense or
Chief Financial Officer.
Audit process
The primary accounting
concern in every government contract is the cost. As a result, during auditing,
the DCAA focuses mainly on the costs. The costs in government contracts pass
through classification, segregation, allocation, and reporting processes, which
doesn’t happen in commercial business operations. The audits inspect all costs
closely, including unallowable costs, direct costs, indirect costs, and the
pooling of indirect costs.
Compliance
The DCAA conducts its
audits and other activities to evaluate contractor compliance with government
guidelines and regulations. The DCAA doesn’t certify that its contractors
adhere to DCAA compliance. In
reality, being “DCAA compliant” means that the contractors always stick to the
advice and recommendations of the DCAA.
Audit types
The DCAA and, in specific
instances, the DCMA conduct a variety of audit types. These include forward
pricing, incurred costs, compensation, benefits, pre-contract awards, labor
chargers, and contractor purchase systems review. However, the audit system
doesn’t remain confined to the ones mentioned here.
