Running Your Business

And Life with DCAA Gets a Bit More Interesting

February 6, 2014

DCAA union participation is now nationwide.

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DCAA Relations, Department of Defense News

DOD Requires Training for DCAA Auditors

January 30, 2014

DOD is establishing a Financial Management Certification program for most DOD employees working in financial areas, to include DCAA. Here is a link to a briefing on the program:
November 23, 2015 — This link no longer works but this one does:
As with any new beginning, there are many questions.
The program seems to focus only a few hours on course work that directly relates to DCAA’s work with contractors (Accounting, Auditing, Acquisition/Contracts, and Ethics).
Also DCAA Auditors typically focus on two areas of GAAP – FASB and GASB. Federal accounting standards differ from those for commercial/nonprofit (FASB and local government (GASB. The certification program seems to focus mainly on federal accounting. This is due to the general requirement for the majority of DOD finance employees who need is in the area of federal accounting.
Finally, I always remind clients before a DCAA audit about the practical audit gap between themselves and even the best DCAA auditors. Few DCAA auditors have ever done a payroll, or an invoice, or an impairment decision. It does not appear that a Federal Financial Management certification holder will enjoy any of this critical practical knowledge.
But, it is  a start, and the rest can come.
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DCAA Relations, Running Your Business

Did They Put it in Writing?

January 2, 2014

Reading Armed Services Board of Contract Appeals (ASBCA) cases are one of the items clients pay me for in my hourly fees but is not normally an exciting part of my day. I try and keep my eyes from glazing over and continue to express gratitude that I did not attend law school.

There is a recurring theme in the Small Business Contractors that end up before the Board, a “my word versus theirs” theme. Sometimes it is obvious that the contractor is lying about statements allegedly made by someone in the government. Sometimes it is just as obvious that someone in the government made statements that cannot be supported.

The majority of the time it is difficult to determine which party, contractor or government, enjoys the faulty memory of the events.

I usually get involved after the telephone conversation or meeting. I worked with one client that spent millions of dollars on such a telephone conversation only to see the government deny the costs and watch the courts never make that determination (the contractor lost on a technicality).

Another client claimed a DCAA auditor called him on his cell phone over the weekend and offered to approve his company’s accounting system if they fired me as a consultant. As I dug into that one, I came to believe that it was the client who made the offer, not DCAA making the demand. I came to believe this after I terminated my relationship with the client upon realizing they were not really interested in compliance, only deals.

And sometimes it is simply stupid. I am sure there is a DCAA Supervisor trying to convince the OIG that he never told me that:

  • He confirmed that his improperly developed finding meant that he demanded a policy and procedure that required employees to obtain approval from a supervisor before hitting the backspace key on a timesheet entry, or
  • He asserted in an exit interview that when the FAR or DFARS did not cover an issue and when the guidance in the CAM did not quite fit, DCAA was required to stretch the CAM to cover the issue.

It is about accountability, not just for contractors but the government also. Part of the way we help bring DCAA out of their ongoing crisis is by setting standards for their behavior and ensuring consequences for their behavior. We need to hold them accountable as victims of their inconsistencies and as taxpayers who do require protection.

I am not saying record every conversation with the government. In many states one sided recording is illegal and the federal law follows the state laws.

What I am saying is document everything.

  •          When a government employee makes a decision or assertion by telephone or in person, record that by following up with an email or letter.
  •          Keep your emails and make them part of your contracting record.
  •          Bring other people into the conversation such as DCMA or the programs people.

This is nothing but being professional and should offend no one. I often tell DCAA during field work that I will follow up each segment with an email to them documenting what we had done, with attached backup documentation and copied to the client.

Even this does not always work. a DCAA supervisory, field auditor, and I once reconciled a public voucher to the client’s general ledger only to have DCAA later claim that it did not reconcile (despite the email and supporting documents). I am still trying to get that supervisor to, as we said in the Airborne, “pull his head out of his fourth point of contact”.

The vast majority of times, my relationship with DCAA is positive and the agency is full of dedicated government employees who are protecting taxpayers on a daily basis with little praise, pay, or support.

The vast majority of people do not commit murder or steal either, but there are laws and procedures we all follow to deal with those few individuals who do. We are talking about good business and protecting yourself.

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Accounting System, Cost And Accounting, DCAA Relations, Incurred Cost Proposals

When is a Timesheet a Timesheet?

December 30, 2013

I am going to argue that the original guidance provided to DCAA auditors in the Contract Audit Manual and the DCAA audit programs, over time, gave birth to a paradoxical view of timekeeping that DCAA continues to trip over on occasion.

DCAA based their original guidance on paper timesheets and included the following guidance:

  • Employee physical possession of the timesheet
  • Timesheets completed in ink
  • Only one timesheet is prepared per employee per period
  •  Timesheets are preprinted with employee name and identification number
  • Corrections are made in ink, initialed by the employee, properly authorized, and provide a sufficient and relevant explanation for the correction.
  •  Employees and supervisors sign the timesheet

This is excerpted from 5.909.1 of the CAM.

Looking at this (filling out in ink, preprinting, initialed corrections, signature, and so on), I am reminded of a legal contract or even a bank draft (check). It always appeared to me that DCAA was providing guidance for the creation of a legal document – a timesheet certified by the employee and accepted by the counter signature. DCAA reinforced this thought several years ago when offices across the country argued that these timesheets needed a unique number just like a check.

I agree with the concept, even if I did not agree with the unwritten guidance for unique numbering.

After basking in the glow of agreement with DCAA, I decided to take it a step forward, especially since some twenty plus years after their introduction, DCAA still fails to provide guidance on how electronic timesheets are created (Please, please do not raise 5.902.2 – that is badge and punch cards).

The final straw came when a DCAA supervisor argued that management intervention was required before an employee could safely utilize the backspace key to change an hourly entry from 4 to 3 (see the subsequent cartoon here). I understood I really needed to introduce some clarification.

What makes a contract a contract is the signature attesting to all that is above it. We do not want lawyers issuing contracts in pencil, but I do not mind if they use that tool to draft it. On numerous occasions over the years, I scratched out a section of a contract and replaced it with a glossed section. The gloss section bears my initials along with the initials of the other party. Who has not scratched out the date on a check, corrected it, and initialed the same?

What makes a timesheet a timesheet is the SIGNATURE. What makes a timesheet final is the COUNTER SIGNATURE. Everything before this is simple conjecture.

This does not mean that Contractors should not set standards for timesheet completion such as daily completion, using ink, initialing changes, and so on.  I encourage weekly timesheets so the manager’s memory is fresh. The guidance provides uniform standards to allow for improved management.

DCAA is free to chime in with their thoughts as long as they understand it is not a timesheet until it is signed (electronically or otherwise) and presented to the employer.

If you believe the difference is too subtle to bother with, just remember the hours I spend arguing with DCAA about the employee’s right to use the backspace key.

Both Books graphic

Available on Amazon or www.dcaacompliance.com

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Accounting System, Cost And Accounting, DCAA Relations, Department of Defense News

DOD OIG Report Calls for CORs to Document ODCs

August 23, 2013

Is that enough acronyms for a title?
New Department of Defense Office of Inspector General (DOD OIG) report suggests Contracting Officer’s Representatives (CORs) request and review actual receipts for other direct costs (ODCs) such as airline tickets. The assumption is that they are to coordinate with DCAA if they question an expense.
I imagine this arises out of the alleged (cough, cough) DCAA backlog and OIG  is desperately trying to find a way to protect tax dollars.
Desperate may be the correct term, as the ladies and gentlemen the OIG suggests to assist in this critical task are neither trained or experienced in cost auditing.
Maybe they should tune in to my webinar next month on M&E? With that I plug our new website.
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