The ultimate objective of
the government is to look for assurance that it’s paying fair and reasonable
prices for the goods and services procured. It becomes understandable when you
consider the fact that the government of the nation is the largest consumer.
Naturally, it expects to get the best of everything against every penny it
spends. That’s why government contractors have to face a DCAA Audit.
The Pre-Award audit
So, what kind of audits
should you expect? The first one is the Pre-Award audit, which also happens to
be the most common audit. It primarily focuses on analyzing the accounting
system used by a contractor to ascertain whether it’s acceptable or not. For
this audit, the DCAA will expect the contractor to start by filling out the
Standard Form SF1408. After that, the auditing process will begin in earnest.
The Price Proposal audit
The next one worth
mentioning is the Price Proposal audit. You probably know that the contracting
office is the person responsible for assuring the pricing on a proposed
contract. This individual will decide whether it’s fair and reasonable or not.
If he/she finds something amiss, you will have to face an audit of the pricing.
The Voucher audit
For cost-based contracts
like cost reimbursable variants, or cost based progress payments, the vouchers
submitted against these will be subject to periodic auditing. By facing these
audits and coming out clean, you will earn DCAA
Compliance. Of course, the DCAA will first verify whether you recorded
the costs accurately and whether they’re traceable or not.
The Incurred Cost Proposal audit
One more auditing process
worth mentioning is the Incurred Cost Proposal audit. If the contractor has an
award that’s cost reimbursable, he/she has to submit an annual reconciliation
of the actual costs incurred, including all indirect costs.
