Overview
This section defines the specific duties of government auditors regarding the evaluation of contractor costs and identifies the agencies responsible for performing these audits based on the type of contractor involved.
Key Rules
- Auditor Duties: The auditor is responsible for analyzing financial records to advise on the acceptability of both incurred (actual) and estimated (proposed) costs.
- Systems Oversight: Auditors must review the financial and accounting aspects of a contractor's cost control systems.
- Audit Cognizance (Commercial): The Defense Contract Audit Agency (DCAA) is the default audit agency for most contractors, though agencies may negotiate shifts in cognizance for efficiency.
- Audit Cognizance (Non-Commercial): For educational institutions and nonprofit organizations, audit responsibility is determined by the OMB Uniform Guidance (2 CFR part 200).
- Access to Records: Auditors are empowered to perform any analysis that requires access to the contractor’s financial and accounting records supporting cost data.
Practical Implications
- Contractors must maintain robust, transparent accounting systems, as auditors have a broad mandate to examine financial records for both pre-award price justifications and post-award cost vouchers.
- While most commercial defense and civilian contractors will interface primarily with DCAA, universities and nonprofits must ensure compliance with specific OMB Uniform Guidance audit standards which differ from standard DCAA procedures.