What Types of Audits Does DCAA Perform?

audit automation softwareIt’s common for contractors to enter into agreements with local, state, and federal government agencies to provide these agencies with goods or services. When this occurs, the contractors in question must comply with government acquisition regulations (the specifics of which are based on the type of contract used in specific situations). The Defense Contract Audit Agency, or DCAA, is in charge of assessing contractor compliance with these aforementioned regulations. Contract audits are performed to ensure contractor compliance. To find out more about these audits and how to prepare for one, read on.

What Types of Audits Does DCAA Perform?

There are more than 50 kinds of audits performed by DCAA to ensure contractor systems are transparent and accurate. The two main categories of DCAA audits are pre-award audits (which take place before a contract is signed) and post-award audits (which can occur any time after a contract is signed).

Some common pre-award audits are proposal pricing audits, forward pricing rate audits, and accounting system surveys. Post-award audits are meant to determined whether or not the contract price negotiated between the agency and contractor has increased significantly due to a failure to disclose or submit accurate and complete data pertaining to cost and pricing information.

There are many different kinds of post-award audits, including accounting system audits, provisional billing rate audits, cost accounting standard (CAS) audits, incurred cost and annual overhead rate audits, floor checks, material existence audits, voucher/progress payment reviews, contract closing audits, Truth in Negotiation Act compliance audits, and more.

In addition to these two main categories of audits, there are also contractor business system audits, which investigate the internal processes and controls used by contractors. Many government contracts include supplemental clauses involving detailed criteria pertaining to accounting, estimating, purchasing, material management and accounting, earned value management, and property/equipment. Audits may be conducted to assess whether these regulations are being accurately followed.

How Can Contractors Prepare For a DCAA Audit?

Statistics show that warehouse management systems can decrease errors by up to 70%. For this reason, many warehouses have adopted property inventory management software systems. For government contractors, it’s even more imperative to incorporate the use of government software systems to ensure compliance.

Contractors must establish and maintain internal controls and comply with regulations outlined by the agency in question. To ensure compliance, audit automation software is necessary. These audit automation tools ensure that all regulations and controls pertaining to efficiency and reporting are adequately followed. Since contractors must provide detailed demonstrations and walk-throughs of system processes, audit management software can provide contractors with the information they require.

While audit automation software is not the only safeguard contractors need to put in place, it’s certainly a vital one. To find out more about how our audit automation software can help you establish and/or maintain compliance as a contractor, please contact us today.