In more than a few instances, government contractors receive a DCAA inquiry which is not directly related to any particular audit. In many cases, the request involves a Contractor Survey (or a Contractor Internal Control Questionnaire) which is requested annually to facilitate DCAA’s audit planning (at least for the moment given DCAA’s propensity to routinely change audit priorities). For repetitive annual requests which are essentially the same set of questions received every October as DCAA begins its new fiscal year, the tendency is to complete the questionnaire without asking DCAA to explain what contractual clause requires this action (don’t ask, there is none).
DCAA is not alone in terms of the occasional contractor survey; for example DCMA routinely sends contractor surveys regarding contractor purchasing systems and the value of expected subcontracting. Neither DCAA nor DCMA could actually point to a contractual requirement for a contractor to complete these surveys, but most contractors complete them (better to work with government regulators than to work against them). However, this begs the question, are there DCAA or DCMA inquiries to which a contractor might “just say no”.
At least with respect to DCAA inquiries (not connected to a specific audit), a contractor could use DCAA’s own policies which require that DCAA data requests have a nexus to a particular audit objective (DCAA Contract Audit Manual 4.202c). At least in theory, a survey which only facilitates DCAA’s general audit planning has no connectivity to a particular audit objective. That said, these are probably not the occasions to just say no, However, there is one DCAA audit inquiry which should give a contractor pause before responding; specifically, “Have you made any changes to your accounting system” (since the last DCAA audit, the last indirect cost rate proposal or in some cases, without any reference to a baseline accounting system).
In a recent DCAA communication, the question was sent by email stating that “DCAA performed our last audit in 2010, followed up in 2011; have there been any accounting changes since then?” (For purposes of this blog, dates have been changed to avoid any identification of the contractor). Oddly, the question came after DCAA had notified the contractor that DCAA had cancelled an audit (the requested audit was transferred to DCMA to perform a review).
The obvious question, if, how and why do I respond to a rather open-ended DCAA request days after DCAA cancelled (before starting) the only DCAA audit since 2011? At the very least, the DCAA email deserves a quick response, “Is this question connected to an audit and audit objective?” At least implicitly, the auditor should recognize the need to connect his/her request to something, if not performing an audit, perhaps planning an audit.
Regardless of the context, a government contractor should use caution in responding to the open ended question which is in absolutely no context. If CAS covered, the contractor will be in a bit of a predicament if the answer is a list of changes (to cost accounting practices) and that list does not match changes which were disclosed as required by FAR 30.
Whether CAS covered or not CAS covered, the contractor is free to reasonably interpret the terminology “change in your cost accounting system” in the context of the system and not necessarily in the context of changes to cost accounting practices within that system. DCAA is thinking the latter, but asking the former and it’s not a contractor’s job to instruct DCAA on proper terminology (i.e. did you mean the system or did you mean the system and/or the accounting practices therein?). One more opportunity to decide if I work with my auditor; i) by asking for clarification or ii) by responding by answering the question they meant to ask; or do I just say no.