DCAA Audits

What are DCAA Audits?

The Department of Defense Contract Audit Agency (DCAA) plays a vital role in safeguarding taxpayer dollars. They achieve this by conducting independent audits of Department of Defense (DoD) contractors. These audits thoroughly examine a contractor's financial practices to ensure that government funds are used properly.

What happens during a DCAA Audit?

DCAA auditors check the contractor's financial operations carefully. This includes:

1. Checking invoices, time records, and accounting systems: This verifies the accuracy and legitimacy of financial claims.
2. Reviewing contracts and supporting documentation: DCAA ensures all costs align with the agreed-upon contract terms.
3. Assessing the allowability, allocability, and reasonableness of costs:
   • Allowable: Costs permitted by the contract and federal regulations.
   • Allocable: Costs directly related to the contract's performance.
   • Reasonable: Costs incurred at a fair and customary market price.

By conducting these thorough reviews, DCAA helps guarantee that government funds are spent efficiently and responsibly.

Types of DCAA Audits:

DCAA offers a range of audits tailored to different stages of the contracting process:

How to prepare for a DCAA Audit?

Contractors can proactively prepare for DCAA audits by:

• Conducting Internal Audits: Identify and address potential issues before a DCAA audit.
• Seeking Professional Guidance: Consult with CPAs or tax attorneys for the latest regulations and audit preparation strategies.
• Maintaining Accurate Records: Ensure your accounting system, policies, and documents are up-to-date and well-organized.

By understanding the types of DCAA audits and taking proper preparatory steps, contractors can increase their chances of a smooth and successful audit experience.

Checklist for a smooth DCAA Audit:

• Maintain accurate and daily timesheets with explanations for edits.
• Ensure all employees and supervisors understand relevant DCAA policies and procedures.
• Follow DCAA guidelines and regulations for timesheet completion.
• Accurately record and document employee overtime hours.
• Obtain supervisor approval and signatures on timesheets.
• Track time accurately for specific projects worked on.
• Attach necessary documents and receipts to the system.
• Maintain records of past audits for future reference.

By understanding DCAA audits and taking proper preparatory steps, contractors can increase their chances of a smooth and successful audit experience.