What does the government want when it employs contractors? It simply wants assurance that it’s paying fair and reasonable prices for the goods and services procured. This fact becomes more understandable when you realize that the government 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.
Price Proposal
What kind of audits should
you expect? Here’s the first one – 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.
Pre-Award
The next one worth
mentioning 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.
Incurred Cost Proposal
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. By completing this
audit and the other audits mentioned here, you’ll earn DCAA Compliance.
Voucher
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 compliance. Of course, the DCAA will
first verify whether you recorded the costs accurately and whether they’re
traceable or not.
