Government Contract Audits and Resolving Audit Disputes

Course includes a special, new component on how to resolve audit disputes.

Understanding the operating policies and procedures of DCAA and DCMA
How audits are conducted; effectively preparing for and conducting yourself during the audit; responding to the results
Recovering costs under Government contracts: what is allowable; what is unallowable
What the auditors look for; contract audit objectives
Allowable and unallowable costs
Working relationship with auditors
DCAA and DCMA rights and powers
Contractor rights and remedies
The impact of the Acquisition Streamlining Statutes
Managing the audit conflict: untangling audit problems; the burden of proof; using DCAA's Contract Audit Manual and FAR to prove your point; effective use of case law in the audit environment
Resolving audit issues without litigation
Minimizing the adverse impact of the new limitations on compensation

If you are in any way involved with Government contracting you undoubtedly know how crucial — and often, how difficult, frustrating and complicated — a contract audit can be. To avoid audit problems, it is important to understand how Government audits and reviews are performed, what to expect, how to prepare and how to respond. It is equally important to know how to resolve audit issues both before and after a contracting officer’s final decision. In most instances, the best that can happen is that nothing will happen — no changes, no lost costs. And that outcome is far more likely if — and here is the big “if” — you know what an audit involves, how it is conducted, how to prepare for it and how to conduct yourself.

To accomplish this, we have assembled a distinguished, experienced Course Faculty who have developed this specially tailored course based on their years of field experience as employees of the Federal Government and as professional practitioners. Dealing with the DCAA and DCMA on a regular, daily basis, the Faculty has designed a course of practical, pragmatic value—no theories, no general philosophies—just exhaustively learned, hard-edged facts, guidance and solutions.

Each attendee will receive a comprehensive Manual of materials prepared exclusively for the program by the Course Faculty.

Government Contract Audits and Resolving Audit Disputes Course Curriculum

Overview
1. The Defense Contract Audit Agency (DCAA)
2. The Defense Contract Management Agency (DCMA)
3. The Defense Logistics Agency (DLA)
4. Purpose of the Agencies
5. Agency Authority
DCAA
1. The Foundations
  1. Responsibilities and authority
  2. Structure
  3. Audit Objectives
2. Relationship with the GAO (Government Accountability Office)
  1. GAO’s access to audit records and files
  2. Response to GAO inquiries
  3. Liaison of activities
3. Relationship With Other Government Organizations
  1. Procurement offices
  2. DCMA
  3. Inspector Generals
  4. Legal counsel
  5. Boards of Contract Appeals
4. Internal Operations
  1. Headquarters
  2. Regional offices
  3. Resident and branch offices
  4. Professional staff
  5. Audit statistics
  6. Reports and surveys
5. Audit Guidance
  1. Contract audit manual
  2. Directives and working papers
  3. Special audit guidance
  4. External materials
DCMA
1. Contract Management Divisions
  1. Administrative Contract Officers
  2. Price/Financial Analysts
  3. Pre-award activities
  4. Engineering/value engineering
2. During the Contract’s Life
  1. Pre-award reviews
  2. Contract/production activities
  3. Pricing
  4. Provisioning
  5. Spare parts requirements
  6. BOA’s ordering agreements
  7. Processing change orders
  8. Closing of contracts
  9. Pricing cases
  10. Delinquent deliveries
  11. Post-award meetings
Impact of The Acquisition Streamlining Acts
1. Bid Protest Provisions
2. Disputes
3. Simplified Acquisition Threshold
4. Commercial Items
5. Small Business Provisions
Recovering Costs Under Government Contracts - What is Allowable and What is Unallowable
1. General Rules-Allowability, Allocability and Reasonableness
2. Certifications, Representations, and Penalties and Interest
3. Personnel and Related Costs
4. Facilities and Equipment
5. Production Costs
6. IR&D/B&P and Selling Costs
7. Other Business Costs
Auditors' Relationships With Contractors
1. Matters Regarding Information
  1. Safeguards over contractors information
  2. Access rights to contractorsand, records
  3. Government's rights if contractor denies access
  4. Audit entrance conference
  5. Audit exit conference
  6. Access to DCAA audit reports and work papers
  7. Use of FOIA
  8. Post award conference
2. General Working Relationships
  1. Internal and external staff coordination
  2. Avoiding formal disputes process
  3. Responding to the DCAA audit report
  4. DCAA’s determination of indirect expense rates
  5. Resolving conflicts at the local level
  6. Informal working agreements
  7. Formal and advance working agreements
  8. Approaching auditor’s supervision
3. Explaining Mistakes To Auditors
4. The Formal Disputes Process
  1. Issuance of DCAA Form 1
  2. How to respond
  3. Issuance of final decision
  4. The appeal process
DCAA and DCMA Audits: What To Expect, How To Prepare
1. Pre-award Accounting System Reviews
2. Operational Audits
3. Forward Pricing Rates
4. Establishing Provisional Billing Rates
5. Cost Accounting Standards
  1. Disclosure statements
  2. Compliance reviews
6. Incurred Costs
7. Special Considerations
  1. Out of period costs
  2. Credits and refunds
  3. T&M contracts
  4. Technical services
8. Purchased Services and Material Costs
  1. Evaluation of policies and procedures
  2. Internal control
  3. Make or buy
  4. Subcontracts
9. Labor Costs
  1. Internal controls
  2. Personnel policies and procedures
  3. Comprehensive labor audits
10. Indirect Costs
  1. Indirect cost proposals
  2. Submission requirements
  3. Changed conditions
  4. Methods of allocation
  5. Applicability of cost accounting standards
11. Special Audits
  1. Delay and disruption claims
  2. Hardship claims: PL 85-804
  3. Defective pricing (TINA)
  4. Fraud
Special Problem Areas and Their Resolution
1. "Allocable To Government Contracts" - What That Phrase Really Means
2. Allocation Bases
  1. Single element
  2. Value added
  3. Total costs
3. “Reasonableness” of an Expense
  1. What is "reasonable”
  2. Burden of proof
  3. Proof and documentation
4. Audit Documentation
  1. What is required
  2. What will suffice
5. Advertising vs. Technical Information
6. Billing Rates
  1. Provisional (interim)
  2. Adjustments
7. Cost Accounting Standards
  1. Citations for noncompliance
  2. Noncompliance impact statements
8. Changing the Indirect Cost Structure
  1. Types of change
  2. DCAA’s reaction
9. Common Control
10. Entertainment vs. Meetings and Conferences
11. Compensation
  1. Executive benefit plans
  2. Employee benefits
  3. Compensation limitations
12. Intercompany and Affiliate Charges
  1. Goods
  2. Services
  3. Rent
13. Coping with Downsizing and Restructuring
  1. Defining restructuring costs
  2. Novation agreements
  3. Advance agreements
14. Agreements
  1. Informal
  2. Formal
  3. Advance
15. Lack of Timely Response by Government to Open Issues
16. Improving Payment of Invoices
17. Public Vouchers
  1. Types
  2. Expediting DCAA processing
18. Small Business Designations
19. Uncompensated Overtime - Alternative Approaches
20. Ethics Issues
21. Environmental Costs

Course Faculty

Leonard G. Birnbaum, Course Director Senior Partner in Leonard G. Birnbaum and Company, specializing in providing guidance and consultation to private and Government organizations in Government auditing, accounting, contract administration and other procurement matters • Certified Public Accountant and attorney • Specialist in resolving disputes with the DCAA involving Cost Accounting Standards, defective pricing and other accounting issues • Former Supervisory Auditor for the DCAA and Naval Officer, CAPT (SC) USNR.

David Sakofs Certified Public Accountant and Partner in Leonard G. Birnbaum and Company, where he is responsible for advising clients on a wide range of procurement matters • Extensive experience in implementing accounting systems for Government contractors • Formerly Auditor for DCAA at the New York City Branch Office and the Bendix Residence Office.