October 12, 2012
DCAA has adopted a method for addressing the backlog of audits, specifically, they received permission to ‘sample’ audits with an Auditable Dollar Value under 250M. There are a lot of exceptions in order to be selected for the sample pool.
First, to quote from the DCAA documented linked above:
Low Risk Proposal Criteria
- We have prior incurred cost audit experience (i.e., an incurred cost audit has been performed).
- No significant audit leads (including assist audits, corporate, intermediate home office or service center) or no other significant risk has been identified. For example:
- any known business system deficiencies that would have a significant impact on the final indirect rate proposal for this FY;
- significant risk identified by the contracting officer;
- significant changes in the contractor organization or operations (e.g., significant increase in ADV); or
- other significant risk identified by the audit team.
- No prior significant total exception dollar reported in the last year audited.
Next, here is a table showing the findings thresholds:
|Low-Risk Adequate Proposals byAuditable Dollar Value (ADV)||Amount of Previous Exception Dollars(including Corporate, Intermediate
Home Office, etc) Classified as
|$1M or less||$15,000|
|$1M to $15 Million||$25,000|
|$15M to $50 Million||$55,000|
|$50 Million to $250 Million||$100,000|
Of course, even if you go into the pool. There is still the chance of an audit. The goals are as follows:
|Low-Risk Adequate Proposals byAuditable Dollar Value (ADV)||Low-Risk SamplingPercentages|
|$1M or less||1%|
|$1M to $50 Million||5%|
|$50 Million to $100 Million||10%|
|$100 Million to $250 Million*||20%|
|Greater than $250 Million||100%|
Finally, at the moment, 100% non DOD, nonprofits, and educational institutions are exempt from the change.
It is assumed the program is temporary and will disappear once DCAA catches up or, I imagine, a whistle-blower scores a major coup on unaudited fraud as recently occurred in my hometown of Albuquerque.