Contract Audits

In response to congressional requests, GAO reviewed Defense Contract Audit Agency (DCAA) operations, specifically: (1) DCAA effectiveness in planning and implementing its audit work and managing its resources; and (2) the usefulness of DCAA reports.

DCAA audits Department of Defense (DOD) contracts and provides accounting and financial advice on proposed and existing contracts to DOD procurement and contract administration personnel. In a high percentage of audit reports that GAO reviewed, DOD used DCAA audit work in establishing the government's negotiating position or in administering existing government contracts. GAO found that inconsistent adherence to the DCAA planning system resulted in lack of effective DOD identification of its resources and needs. GAO also found differences in the way DCAA field audit offices implement the planning system, specifically: (1) nonperformance of vulnerability assessments of the government's potential exposure to fraud, waste, and error; (2) incomplete and outdated permanent files providing basic information on contractors' operations, internal controls, and auditable areas; (3) no uniform basis for applying a DCAA procedure designed to identify auditable areas having the greatest potential for charging unacceptable costs to the government; and (4) failure to use the dollar value recorded as work backlog in determining resource needs. GAO further found that DCAA customers were most satisfied with the accuracy, usefulness, and ease of understanding of the reports and least satisfied with the reports' timeliness.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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