DCAA Relations, Incurred Cost Proposals

DCAA Finds the Broom and Rug

October 12, 2012

http://www.dcaa.mil/mmr/12-PPD-023.pdf

DCAA has adopted a method for addressing the backlog of audits, specifically, they received permission to ‘sample’ audits with an Auditable Dollar Value under 250M. There are a lot of exceptions in order to be selected for the sample pool.

First, to quote from the DCAA documented linked above:

Low Risk Proposal Criteria

  • We have prior incurred cost audit experience (i.e., an incurred cost audit has been performed).
  • No significant audit leads (including assist audits, corporate, intermediate home office or service center) or no other significant risk has been identified. For example:
  •  any known business system deficiencies that would have a significant impact on the final indirect rate proposal for this FY;
  •  significant risk identified by the contracting officer;
  •  significant changes in the contractor organization or operations (e.g., significant increase in ADV); or
  • other significant risk identified by the audit team.
  • No prior significant total exception dollar reported in the last year audited.

Next, here is a table showing the findings thresholds:

Low-Risk Adequate Proposals byAuditable Dollar Value (ADV) Amount of Previous Exception Dollars(including Corporate, Intermediate

Home Office, etc) Classified as

Significant

$1M or less $15,000
$1M to $15 Million $25,000
$15M to $50 Million $55,000
$50 Million to $250 Million $100,000

Of course, even if you go into the pool. There is still the chance of an audit. The goals are as follows:

Low-Risk Adequate Proposals byAuditable Dollar Value (ADV) Low-Risk SamplingPercentages
$1M or less 1%
$1M to $50 Million 5%
$50 Million to $100 Million 10%
$100 Million to $250 Million* 20%
Greater than $250 Million 100%

Finally, at the moment, 100% non DOD, nonprofits, and educational institutions are exempt from the change.

It is assumed the program is temporary and will disappear once DCAA catches up or, I imagine, a whistle-blower scores a major coup on unaudited fraud as recently occurred in my hometown of Albuquerque.

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