Curriculum Outline -
Understanding Government Contract Cost Accounting Workshop
October 25 & 26, 2005
Day One - October 25, 2005
1. Overview
- The Defense Contract Audit Agency (DCAA)
- The Defense Contract Management Command (DCMC)
- The Defense Logistics Agency (DLA)
- Purpose of the agencies
- Agency authority
2. Recovering Costs Under Government Contracts: What is Allowable and What is Unallowable
- General Rules: Allowability, Allocability & Reasonableness
- Certifications, representations, and penalties and interest
- Personnel and related costs
- Facilities and equipment
- Production costs
- IR&D/B&P and selling costs
- Other business costs
3. Auditor's Relationships with Contractors
- Matters regarding information
? Safeguards over contractors information
? Access rights to contractors' records
? Government's rights if contractor denies access
? Audit entrance conference
? Audit exit conference
? Access to DCAA audit reports and work papers
? Use of FOIA
? Post award conference
- General working relationships
? Internal and external staff coordination
? Avoiding formal disputes process
? Responding to the DCAA audit report
? DCAA's determination of indirect expense rates
? Resolving conflicts at the local level
? Informal working agreements
? Formal and advance working agreements
? Approaching auditor's supervision
- Explaining mistakes to auditors
- Formal Disputes Process
? Issuance of DCAA Form 1
? How to respond
? Issuance of final decision
? Appeal process
4. DCAA & DCMA Audits: What to Expect, How to Prepare
- Pre-award accounting system reviews
- Operational audits
- Forward pricing rates
- Establishing provisional billing rates
- Cost Accounting Standards
? Disclosure statements
? Compliance reviews
- Incurred Costs
- Special Considerations
? Out of period costs
? Credits and refunds
? T & M contracts
? Technical services
- Purchased Services and Material Costs
? Evaluation of policies & procedures
? Internal control
? Make or buy
? Subcontracts
- Labor costs
? Internal controls
? Personnel policies & procedures
? Comprehensive labor audits
- Indirect costs
? Indirect cost proposals
? Submission requirements
? Changed conditions
? Methods of allocation
? Applicability of cost accounting standards
- Special Audits
? Delay & disruption claims
? Fraud (TINA – Truth in Negotiation Act – provide form)
5. Special Problem Areas and Their Resolution
- Allocable to Government Contracts: What that phrase really means
- Allocation bases
? Single element
? Value added
? Total costs
- Reasonableness of an expense
? What is reasonable
? Burden of proof
? Proof and documentation
- Audit documentation
? What is required
? What will suffice
- Advertising vs. technical information
- Billing rates
? Provisional (interim)
? Adjustments
- Cost accounting standards
? Citations for noncompliance
? Noncompliance impact statements
- Changing the indirect cost structure
? Types of change
? DCAA's reaction
- Common control
- Entertainment vs. meetings and conferences
- Compensation
? Executive benefit plans
? Employee benefits
? Compensation limitations
- Lack of timely response by goverment to open issues
- Improving payment of invoices
- Public vouchers
? Types
? Expediting DCAA processing
- Small business designations
- Uncompensated overtime: alternative approaches
- Ethics issues when government does procurements
- Environmental costs
- Agreements
? Informal
? Formal
? Advance
Day Two - October 26th, 2005
1. Issues Related to Direct Costs
- The significance of direct vs. indirect cost distinctions
- Distinguishing between direct and indirect costs
- Problems with consistency
- Accounting for direct costs
- Problems with distinguishing direct costs
2. Issues Related to Indirect Costs
- Indirect cost relationships (determining logical and homogeneous cost pools)
- Allocation base selection
- Factors affecting number of cost pools
- Impact of definition of the cost accounting period
- Special allocation methodologies
3. Accounting for unallowable costs
- Specific identification of unallowable costs
- Nonspecific identification of unallowable costs
- Effects of unallowable costs on cost allocations
- Recordkeeping options
4. Structuring specific cost pools
- Home office
- General and administrative
- IR&D/B&P
- Overhead
5. Issues related to changes to a Cost Accounting Practice
- Basic requirements and definitions
- Cost impact proposals
- Status of new and proposed rules of the Cost Accounting Standards Board
6. Special Concerns
- Uncompensated overtime
? Definition
? Accounting alternatives
7. Decisions and Changes Affecting and Impacting Accounting Issues
- FAR changes
- CAS changes
- Board decisions
- Court decisions
8. Cost Accounting Standards Issues
- Applicability
- Full vs. modified
- Exemptions
- Disclosure statements
9. Case Study(s)
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