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DODIG Report on DCMA Actions Regarding DCAA Incurred Cost Audit Reports

In a recent report from the Department of Defense Office of Inspector General (“DODIG”) (DODIG-2017-055, dated February 9, 2017) the DODIG found several instances when the Defense Contract Management Agency (“DCMA”) contracting officer’s (“CO”) actions did not comply with Federal Acquisition Regulation (“FAR”), DoD Instruction 7640.02, or DCMA instructions. The findings resulted from a review of 22 incurred cost reports judgmentally selected from a pool of 1,072 Defense Contract Audit Agency (“DCAA”) incurred cost reports issued between September 2013 and July 2015. In its review, the DODIG evaluated the appropriateness of DCMA actions on DCAA findings reported in the 22. Read More.

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Can Contractors Rely on Previous DCAA Audit Findings?

By: John Ford , Senior Consultant, Government Contractor Services Group One of the more frustrating things that contractors face is Defense Contract Audit Agency (“DCAA”) auditors changing their minds about the allowability of costs. This is particularly troublesome if the contractor has been including the cost in its indirect cost pools for years without DCAA questioning the allowability of the cost, then, without warning, DCAA questions the cost and alleges that the cost is expressly unallowable. Compounding this is the fact that the claim by DCAA is asserted several years after the cost was incurred. In the meantime, the contractor has included. Read More.

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Auditor Strikes Back: The Proof is in the Pudding – Defending Professional & Consultant Services Cost

As we reported in October, the Defense Contract Audit Agency (“DCAA”) Contract Audit Manual (“CAM”) was recently updated. One of the 13 areas of cost updated related to the allowability of professional & consultant costs. This topic is covered in Chapter 7 of both the previous version and new version of the CAM. The new guidance provides more insight into the evidence required to defend the costs incurred by the contractor. The evidence required by DCAA is to help prove the true nature of the professional services costs and clear up any “gray area” or concerns. Specifically, the guidance states contractors need. Read More.

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The Auditor Strikes Back: Always a Bonus of Contention

As we reported in October, the Defense Contract Audit Agency (“DCAA”) Contract Audit Manual (“CAM”) was recently updated. One of the 13 areas of cost updated related to bonus and incentive compensation costs. This topic is covered in Chapter 7 of both the previous version and new version of the CAM. Bonuses and incentive compensation can mean many things including cash, stock, stock options, stock appreciation rights, phantom stock plans, and/or a combination of the aforementioned forms. Bonus and incentive compensation can also be paid in the short/current term or in the future/long term. These plans can differ greatly between contractors and. Read More.

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Auditor Strikes Back: Appreciating Depreciation

The Selected Areas of Cost guidebook replaces Chapter 7 of the Defense Contract Audit Agency (“DCAA”) Contract Audit Manual (“CAM”). One of the 13 sections that have been rewritten and updated covers depreciation. Below we will take a deep dive into some of the new updates. When a contractor typically owns tangible personal property which provides services for a number of years, that cost is recorded as an asset (rather than expense) in the year the asset is acquired. According to the matching principle, a portion of the asset should be reported as an expense during each period of the. Read More.

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Required Documentation in Support of Consultant Costs

By: Curt Smith, Manager, Government Contractor Services Group The allowability of consultant costs is sometimes a point of contention between contractors and Defense Contract Audit Agency (“DCAA”) auditors, and often the issue is insufficient documentation. What evidence is required by the Federal Acquisition Regulation (“FAR”) to document consultant costs sufficiently and how do auditors determine allowability given this requirement? A quick review of FAR and guidance for DCAA auditors concerning consultant costs will greatly help answer these questions. The general parameters of allowability for consultant costs are described in FAR 31.205-33 — Professional and Consultant Service Costs. However, other cost. Read More.

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