We would like to revisit a recent DCAA Memorandum for Regional Directors (MRD) following several comments from our clients about recent audit experiences with DCAA. The MRD is titled "Audit Guidance on Performing Sufficient Testing" (12-PAS-015, available here). Clearly, as the opening sentence in the "Background" paragraph states; this MRD is part of the DCAA reaction to criticism by the GAO going back to 2008 and 2009. In our experience, the content, including "Example Scenarios" provides audit guidance in detail that is extraordinary for a DCAA Headquarters communication to the field. Some of the procedures mentioned should be fundamental knowledge, and even intuitive, to the career auditor. However, we are aware that with the significant ICS backlog, DCAA is aggressively hiring to increase staffing levels. The sources for new staffing appear to be recent graduates, auditors from other agencies (such as the Air Force Audit), and individuals from private sector with financial backgrounds. Likely none of the individuals hired from these sources have significant Government contract cost accounting and regulatory compliance experience. It is probably a safe assumption that the attached MRD reflects DCAA's reaction to criticism; as well as the reality that many new hires arrive without the aptitude to immediately perform audits which meet GAGAS standards.
We believe the content of this MRD and the experience level of newly hired DCAA staff can be significant to our clients as they are committed to avoiding future criticism for insufficient testing. Several of our clients have indicated that DCAA is asking for data they have never asked for in the past and auditors are performing significantly more testing. The impact will be that, 1) auditors will remain on-site longer, 2) they will request much more data than in past similar audits; and 3) additional client resources will be required to support the audit related activities.
How you will be impacted and tips for navigating the increased testing: