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The DCAA Blues

In a recent survey of federal contractors conducted by the public accounting firm Grant Thornton, close to one in five contractors report bad blood between them and the DCAA. Per the survey, "The relationship between contractors and government auditors and contracting officers has deteriorated during the past year. The relationship with auditors was rated as fair or poor by 19% of the surveyed companies."

This is nothing new. Contractors and auditors have had a contentious relationship over the years, and it was only exacerbated by the 2008 GAO report that was critical of the DCAA . Auditors will tell you that part of their mission is the dis-allowance of billed costs and the recovery of such costs on behalf of the federal  government.

While it is never a good idea to be uncooperative with DCAA auditors, it is a good idea to spend as much face time as possible with them while they're on your premises and to not leave them alone with your accounting records as they further their mission. As they question costs, it is always good to be there to provide answers, because otherwise you might not get the benefit of the doubt. Not that you have anything to hide, but remember they are looking to find "unallowable" costs that they can recoup on behalf of the US Government. It has been found that companies who leave the auditors to their own devices will be given a negative audit report more often that not. Having an "acceptable" and  compliant cost accounting system (such as SYMPAQ) that features a clear audit trail will definitely help make the auditor's job easier, but they are looking for deficiencies in your costing and billing practices and nothing is going to change with respect to their primary focus.

8 Steps to Take When Dealing with the DCAA

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