What Are DCAA Audits? Five Types to Know.
Aerospace and defense industry contractors are required to meet numerous governmental requirements. These are set forth as parameters for doing business with agencies like the U.S. Department of Defense (DoD) and its partners such as MMAS, ITAR, DCMA, and DCAA. DCAA audit requirements are among the most complex. Often professional compliance specialists are needed to help you to meet – or exceed - compliance requirements.
How Epicor Can Help
Understanding DCAA audits is relative to knowing you have support to achieve full compliance. Aerospace and defense providers have their hands full completing projects efficiently, on time, and on budget. They need to know compliance is taken care of within their workflows. Epicor makes the compliance process easier by integrating a powerful ERP software from Epicor Kinetic. Learn More
What is a DCAA Audit?
DCAA audits are completed by the Defense Contract Audit Agency (DCAA), a regulatory agency that serves the DoD and other entities with defense contract audits and financial oversight of government contracts. DCAA audit preparation for contractors is commonly preceded by pre-award surveys. The process also includes post-award audits, or a review of incurred costs of the contract. Additional DCAA audit services include providing guidance to negotiating contract officers, auditing business systems and processes, as well as offering custom DCAA audit services when independent voices are needed or a contract accounting system is stuck in a roadblock and needs to be able to proceed.
Types of DCAA Audits
Let’s take a closer look at each of the different types of DCAA audits commonly completed by the agency:
- Incurred Cost Audits – The post-award audit includes a review of contract costs incurred to understand whether the final cost increased beyond the agreed upon terms, due to inaccurate or non-disclosed cost information. This is completed when a contract price was not fixed upon approval.
- Forward Pricing Audits – These audits work closely with pre-award surveys in that they are completed before the contract is awarded. The DCAA will address the estimation of the pricing on the contract for what has been proposed, goods to be provided, and/or a review of the accounting process, ahead of the contract completion.
- System Audits – Aerospace and defense contractors can often have a full review of systems and processes, including accounting, as well as billing and purchasing procedures, time accounting, inventory management, and more.
- Specialty Audits – The range of specialty DCAA audits varies, but ultimately, they assist contract officers who have specific requests or those seeking an outside opinion on processes, systems, and overarching obstacles to contract completion.
- Provision of Audit Resources – While not a specific audit, it is important to mention the role the DCAA has in providing compliance resources. This includes guidance from the following:
- Federal Acquisition Regulation (FAR)
- Cost Accounting Standards (CAS)
- Truth in Negotiations Act (TINA)
- Content Audit Manual (CAM)
- Correct timesheet information
- Auditing by desired code
- Pricing and certified cost information
DCAA audit requirements are just one element of the larger compliance picture. Understanding cost organization, procedures to have in place ahead of audits, and ensuring an ERP has been properly implemented are all tasks that can be supported by an integration partner during your compliance journey.
The DCAA and Other Federal Agencies
There are several additional agencies and standards related to the DoD that require additional compliance from contractors in the aerospace and defense industry, such as:
- Defense Contract Management Agency (DCMA)
- Material Management and Accounting System (MMAS)
- International Traffic in Arms Regulations (ITAR)
- AS9100
- ISO 9000/01
- National Institute of Standards and Technology (NIST) Cybersecurity
Article by Cre8tive Technology & Design
Cre8tive Technology & Design are an Epicor partner specializing in aerospace & defense ERP solutions.
For more information about the services Cre8tive offer (including help fulfilling DCAA audit standards or meeting compliance requirements, including work required by any DCMA contract administrator) visit www.CTND.com
Cre8tive is a Gold Vendor Member of the Epicor Users Group. The EUG do not endorse or recommend any software or service and it is up to members to ascertain the suitability of a product or service for their requirements.
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