Prior to retiring from DCAA, I was involved in developing the 2012 DCAA Requirements Plan for the Huntsville Branch Office. Since one of my Huntsville contractors was a major, I was required to coordinate my plan with the DCAA Contract Audit Coordinator (CAC) in Chicago. The CAC was estimating the Business Systems staffing requirement for ONE major contractor. The estimate was prepared to consider auditing the Accounting and Billing business system requirements using the draft DCAA audit program for the respective systems. The CAC advised me that its estimate of the hours required to complete TWO business system audits across all segments of the ONE major contractor would be 235,000 over a two-year period. This estimate was communicated to DCAA management at the All Managers Meeting in the fall of 2011.
It does not surprise me that the DOD is now mandating these audits be completed by CPA firms as opposed to DCAA since DCAA’s staffing would need to quadruple to address the business system audit requirements. We all know that is not going to happen so the answer…”let’s get the CPA firms to do it”. Notwithstanding the change in responsibility for these audits, the long pole in the tent is still staffing! The CPA firms are clearly not adequately staffed to address the GAGAS audit requirements for the three business systems at large contractors throughout the country, even on a triennial basis. It is another instance of the Government recommending regulatory changes with no clue regarding the consequences. Even if the DCAA CAC’s estimate was ten times the actual requirements, one can only imagine the resource requirements and enormous costs associated with this proposed rule. Oh, and let’s not forget, DCAA still wants a piece of the pie, so they are going to review the CPA’s work.
Once again, the lights are on but nobody is home!!
PS – Prior to retiring, I did write a Memo to the DCAA director alerting him to the dire consequences of audit requirements related to the new business system rules. I recommended the DCAA propose that the FAR be revised to only require business system audits at contractors whose ADV was a billion dollars or more. I was pleasantly surprised when he called to talk about this, and other issues in the memorandum. He listened but offered no commitment as to what would be done. I guess they finally figured it out…let the CPA firms do it!!
