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By Nick Wakeman

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Nick Wakeman

DCAA gets its own bad review

The Defense Contract Audit Agency got a bit of a slap from the Defense Department’s inspector general.

DCAA audits are the bane of many contractors existence because they are seen as nitpicking and slow. It takes years for some audits to be closed. One executive told me that he has audits just now being closed from 2007.

The inspector general looked at 50 cases from fiscal 2010, and found deficiencies in 37 of them; in fact, the IG is recommending that some reports be rescinded, or have supplemental information added to them.

Among the findings were non-compliance with audit standards in areas such as professional judgment, independence, competence and quality controls and assurance. Each gets is own section in the report.

To their credit, DCAA took corrective actions in 2009, such as revising training curriculums and requiring more training for the audit staff. It also has revamped audit programs and guidance.

The IG said it would evaluate those changes in a future review.

Other areas under fire in the report include planning, communications, evidence and documentation, all of which were found lacking to varying degrees.

One criticism that likely won’t surprise executives around the industry is the assignment of inexperienced auditors to complex engagements. The IG also said that the majority of cases lacked proper supervision.

The IG wants DCAA to continue to improve training and supervision, and to look at processes and procedures.

How soon that has an impact in the field is anyone’s guess.

Posted by Nick Wakeman on Mar 12, 2013 at 9:49 AM

Reader Comments

Tue, Mar 19, 2013

The DODIG's report shouldn't surprise anyone. They based their review on audit reports issued in early 2010- just months after the GAO issued their report in late 2009. I can't imagine anything at DCAA had really changed in such a short time frame. DCAA's response to the recommendations could be summarized as "We already knew that and either already fixed it or are in the process of fixing it."

Thu, Mar 14, 2013 Pete W. Dallas, TX

All good comments. DCAA needs to be outsourced similar to the A-133 process. After working for the bumbling belvoir brats for 25 years, the time has come to disband. I could name names but i won't. Just start at the top and work down. However, DoD won't let it happen. Don't kid yourself, they like the dysfunction. Better to hide all the pork and good old boys network with.

Wed, Mar 13, 2013

GAO looked at this agency in 2009 and concluded their work did not meet standards. THey looked again and at more reports in 2010 and concluded the problem was worse than first reported. The DOD IG yanked their peer review certification in 2009 and despite annual attempts, have still not gotten it back. Now the IG reports that their work STILL does not meet standards. I'm sorry, but the "everyone ELSE is out of step - we're misunderstood" compliant just doesb't hold water. The first commentor is right. This work needs to privatized in much the same way the SEC does the audit of public companies. They've had too many chances already.

Wed, Mar 13, 2013

Why isn't this function outsourced? Commercial world has many auditors that can perform this work and the gov't could carefully manage the COI. At least the contractors could be held to more rigorous performance standards.

Wed, Mar 13, 2013 bubba California

Our firm just recently closed 2004 and are presently being audited by DCAA for 2005-06. This is the second time they performed these audits and I believe the first audits fail the review. So double work for us.

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