Months can expire between the conclusion of an audit and when the DCAA issues an audit report. Save yourselves needless speculation and angst! Make sure to hold an exit conference before auditors leave your premises.
You may want to request that the auditor and the auditor’s supervisor both attend the meeting, Your designated point of contact and affected members of the management team should all attend.
An exit conference gives you the opportunity to discuss audit findings before they become official. You can probe the accuracy of the findings and, if needed, clarify any items upon which there is disagreement. When required, follow up with documentation to support your position.
Auditors should review their findings in order of priority. For high-priority findings, DCAA might not close the audit until you remediate the underlying issues. As a result, it is vital that you gain a thorough understanding of the finding as well as what the auditor will accept as remediation.
Auditors might specify that lower-priority findings be fixed by the next audit. Again, you should obtain auditors view’ on what constitutes an acceptable solution to the issue.
In some cases, auditors may say that your way of handling a procedure is acceptable, but they would prefer that you use a different approach. You must then evaluate the cost to your business of changing your approach versus the cost of having auditors challenge your business processes.
The Preliminary Report
After the exit interview, the auditor should prepare a preliminary report covering all of the findings resulting from the audit. This is often not completed until weeks or months after the audit.
You should begin remediation of any findings addressed at the exit interview while awaiting the preliminary report.
After receiving the report, you should review the findings and respond in writing to any areas of disagreement. Be prepared to back up your position with documentation.
The Final Audit Report
Some months after auditors have left your premises, the DCAA will satisfy its reporting requirements by issuing a final audit report. Typically, reports should include:
- A statement that identifies the scope and objectives of the audit, including the area, system, or proposal being audited.
- Objective audit findings.
- Adequate support for all conclusions.
- A description of any issues that adversely affected the audit.
- A summary of audit results, including the auditor’s findings, recommendations for contractor compliance with applicable regulations, and overall opinions.
Review this report with your management team carefully and develop a plan to address remaining audit findings as required. If you successfully managed the audit process, you can breathe a sigh of relief and return to managing your business.
What if I Disagree with the Audit Report?
DCAA auditors are only human. They can make mistakes or issue findings with which you disagree.
You do have rights of appeal under the Contract Disputes Act. Moreover, your contracting officer can reject DCAA recommendations, although this is increasingly rare.
Litigation can be expensive, however. Unless their errors present a threat to your payments or continued operation as a government contractor, it may be to your advantage to change your systems to comply with their findings. This is a decision that you should make with competent legal counsel.
If you have questions about DCAA or DCMA audits and your business, please call or email Robert E. Jones at (614) 556-4415 or Robert@LeftBrainPro.com.