Tips for Making Your Next DCAA Audit Simple & Straightforward

By December 2, 2020 No Comments

The words “walk in the park” are not usually closely aligned with DCAA audits. In fact, most government contracting CFOs facing an upcoming audit may want a walk in the park to calm their nerves. DCAA audits do not have to be a source of stress. When armed with crucial information about common audit findings, your rights, and tips for working effectively with your auditor, your next audit can be simple and straightforward.

Know Your Rights

The first step to working effectively with your auditor is to understand the most common findings for your type of audit. (You can refer back to this previous post  for an outline of most types of audits.)

The next step is to understand your rights as a government contractor. According to DCAA 10-PAS-024(R), every government contractor has the following rights:

  • Entrance Conference – in this meeting, government contractors can schedule a meeting with the DCAA to learn more about the audit and set objectives. Typically, you’ll want to understand the reason for the audit, the scope of the audit, and the types of information the auditor plans to review. We encourage contractors to get as much specific information as possible to ensure that your auditor has the documentation they need ahead of time and so that you can notify your internal team members and stakeholders as necessary.If the DCAA is requesting privileged documents, we encourage government contractors to be pro-active in coordinating with the DCAA to avoid a Denial of Access finding.
  • Communications During the Audit – It’s a good idea to set up regular meetings with your auditor to address any questions promptly. Regular communications allow government contractors to identify and solve potential data errors, missing information, or other issues before the final report.
  • Denial of Access – this finding must be in writing as it can represent significant roadblocks for future contracts. However, before escalating to Denial of Access, your auditor should work with you to determine why certain requested documents are not relevant, cannot be provided, or are otherwise unavailable. Similarly, when government Contractors are proactive with their auditor by handling any concerns about appropriate access at the entrance conference and subsequent meetings, most contractors can avoid a Denial of Access finding.
  • Preliminary Findings Report – you can request a preliminary findings report after the audit and before the report is final. We recommend reviewing these findings internally prior to your exit conference. You may ask questions on status and preliminary findings, although typically, the only items subject for negotiation relate to costs you can back up with objective evidence.
  • Exit Conferences – As with entrance conferences and ongoing audit communications, these meetings allow government contractors to discuss the audit findings, validate their accuracy, and address/revise any unsupported findings.

What information can the DCAA request?

DCAA auditors are subject to the Generally Accepted Government Auditing Standards. To provide an accurate assessment, auditors may only request access to reports and records that pertain to costs. As a result, government contractors should ensure that they understand the full scope of each DCAA request before giving access to any documents.

Working Effectively with your Auditor

The saying “you catch more flies with honey than vinegar” rings as true in the world of DCAA audits as it does elsewhere. By demonstrating a willingness to work with your auditor on their requests rather than meeting them defensively at every turn with excuses and outright refusals, your audit will flow much more smoothly. Here are our top tips for working collaboratively and effectively to make the audit process easier for both you and your auditor.

  • Offer to have weekly status meetings to cover any outstanding items to be provided by you, as well as any questions that arise.
  • Make sure all requested items, including requested follow-ups, are cleared and tracked.
  • Identify a point person who will be in charge of audit follow-ups.
  • Keep a copy of what is sent to the auditors, including answers to follow-up questions, to demonstrate that you’re staying on top of requests.
  • Maintain a positive attitude towards the audit and the auditor’s requests. After all, withholding or delaying requested information within scope can lead to a higher risk of more detailed audits.
  • Solicit real-time feedback

Although every audit requires a certain amount of preparation, when you know what to expect and take a collaborative approach, your next audit has a greater potential for being practically painless.

Need help preparing for your next audit? WJ Technologies specializes in helping government contractors ensure their accounting systems are compliant with DCAA reporting standards, and we’d love to have a conversation with you to show you how we can work together to level up your company. Contact us today!