If you can't play nice . . .

Rick Steele

Testifying before the Senate last July, Emily Murphy, chief acquisition officer of the General Services Administration, said the agency was considering bringing back its practice of doing post-award contract audits on its multiple-award schedules.

The move came in response to Government Accountability Office criticism of GSA's financial review practices. GSA had stopped doing post-award audits after it changed its regulations in 1997, and vowed to increase its pre-award reviews.

Meanwhile, the Defense Contract Audit Agency seems to be following suit by stepping up the number of audits on cost-reimbursable contracts, especially those issued for work in Iraq, said Mary Karen Wills of Beers & Cutler PLLC.

"There's definitely a trend toward more auditing and a requirement to tighten up processes," said Steve Charles, president of immixGroup Inc. "It's just part of the trend in business overall as a result of the Sarbanes-Oxley Act."

Sarbanes-Oxley, which came in the wake of several high-profile commercial scandals, mandates more rigorous financial reporting and auditing disclosure requirements for publicly traded companies.

But ripples from Sarbanes-Oxley are not the only factors affecting the drive toward doing more audits, experts said. Contracting abuses in Iraq, GSA's review of its client support centers, national security-related contracts and awards hastily issued in the wake of Hurricanes Katrina and Rita also are contributing to the demand, they said.

GSA is planning about 70 pre-award audits in fiscal 2006 and 10 to 15 post-award audits in the agency's schedule program, said Jeffrey Koses, director of GSA's Contract Management Center.

In 2005, the agency did 60 pre-award and 13 post-award audits. In 2004, it did 40 pre-award and 19 post-award.

By contrast, the number of DCAA audits in the last two years has remained about the same: 39,021 in 2005 and 39,705 in 2004, the agency said. When asked about the number of audits for 2006, agency officials said that they do not "manage audit workload by deciding to perform more or less audits in any particular year." The decision to audit a contractor is made on a case-by-case basis at DCAA's 80 audit offices.

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