Defense Contract Audit Agency: Formal Assessment Needed to Determine Future Use of Independent Public Accountants , May 19 , 2025
Defense Contract Audit Agency: Formal Assessment Needed to Determine Future Use of Independent Public Accountants , May 19 , 2025
From the report: "Before certain Department of Defense (DOD) contracts can be closed, the Defense Contract Audit Agency (DCAA) audits contractors’ incurred costs to ensure they are permissible under government regulations. Since fiscal year 2020, DCAA has used independent public accountants to perform certain incurred cost audits. However, DCAA largely eliminated its backlog of incurred cost audits by the end of fiscal year 2018, before using independent public accountants. This freed up resources for DCAA auditors to focus on other complex and higher risk audits—e.g., business system audits (see figure). DCAA officials attribute the elimination of DCAA’s backlog to, in large part, its use of its risk-based sampling methodology, which reduced the number of audits required.
In an October 2018 report to Congress, DCAA outlined its plan for using independent public accountants, though actual use has been less than intended. According to DCAA officials, the number of audits available to independent public accountants declined after DCAA revised its criteria for assigning audits to independent public accountants, and its risk-based sampling methodology in 2020. However, DCAA has not formally assessed its future use of independent public accountants, nor communicated its plans to Congress. This would help DCAA ensure it maintains an appropriate mix of DCAA auditors and independent public accountants—as called for in statute—and avoid future backlogs. Communicating its plan would help facilitate Congress’s oversight role."
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