Business Systems Audits and Assessments Meeting DCAA and DCMA Expectations

Every government contractor may be undergoing business systems audits in the coming months/ years and making the time now for early strategic planning will make sure that your organization is prepared. This session will provide an overview for the entire 6 module program. We will provide a primer for how to design a business systems compliance program and to document your internal control system. There will be a review of the audit process, a brief discussion of the timelines and cycles for each audit, along with the approaches DCMA and DCAA take to their audits.

Topics to be covered include:

• An overview of the DFARS Business Systems Clause
• Applicability of each Business System clause and associated audit triggers
• A discussion of DCMA review and DCAA audit approaches
• Best practices for designing a business systems compliance program to stay ahead of the game, including
• Identifying system, process and control owners
• Compiling and preparing control documentation and narratives
• Performing self-assessments and monitoring
• Key documents and flowcharts to help you prepare
• Policies, procedures, and internal controls
• What to expect on Day 1 of the audit?
• Advice and best practices from experienced contractors

This session will focus on the estimating system and applicable audits covering foundational requirements, audit best practices, and common pitfalls to avoid.

Estimating System Background and Requirements Overview

• Purpose of estimating systems audits
• Overview of DFARS estimating system rule
• Outlining an acceptable estimating system
• Interconnectivity with other business systems
• Unique aspects to DFARS 252.215
• DFARS 252.215-7002 applicability
• Estimating system criteria and requirements, including system structure, training & oversight, and data

Estimating System Audits

• Audit process and data requests
• Stakeholder involvement
• Key audit focus areas
• Historical audit results and audit trends

Estimating System Best Practices and Pitfalls

• Best practices for the audit and system adequacy challenges
• Pitfalls to avoid during an Estimating System audit
• Unique estimating challenges, including forward pricing rates and defective pricing audits

This session will focus on the key requirements for the MMAS system along with audit best practices, frequent questions, and review of key metrics.

A Team Sport

• Inventory Mgmt
• Cost Accounting
• Production Planning & Control
• Procurement
• Engineering

System Overview, Procedures and Process Ownership

• System description, map and PAIAMS
• Functional procedures and owners

System Control Environment

• Integrity and ethical values
• Executive oversight
• Commitment to competency
• Organizational structure/segregations of duties
• Management philosophy & style
• Assignment of authority and responsibility
• HR policies & practices

Risk Assessment & Change Management

• Internal and external risk assessment
• How to manage change

Control Activities

• Purchases & fabricated material are based on valid time-phases requirements as impacted by minimum/economic order quantity restrictions
• Identify operational exceptions as soon as known
• Establish and maintain adequate levels of record accuracy & include reconciliation of recorded investor quantities to physical inventory by Part # on a periodic basis
• Detailed descriptions when manual or system generated d transfers of parts occur
• Maintain a consistent, equitable and unbiased logic for costing of material transactions
• Common inventory account controls
• Adequate controls ensuring physically commingles inventories

Information, Communication & Monitoring

• Documentation and audit trail
• Metrics
• Periodic internal review
• Administrative contracting officer surveillance
• DCAA MAAR 13 audits

This session will focus on key accounting system requirements, audit expectations, and best practices around internal controls, policy & procedures, and audit preparation.

Background

• Accounting System Definition & Requirements Applicability
• Why Accounting Systems are Audited
• Accounting System Oversight & Types of Audits

Accounting System Requirements Overview

• Pre-award Accounting System Requirements
• DFARS Criteria Overview and Analysis
• Other Key Accounting System Contract Requirements

Key Accounting System Processes, Internal Controls, & Audit Considerations

• Overall Control Environment (Including HR & Information Technology Expectations)
• Labor Accounting (Timekeeping & Labor Distribution)
• Billing System
• Indirect Cost and Rates
• Direct Contract Costs (Subcontracts, Material, Other Direct Costs)
• Accounting for Unallowable Costs

Accounting System Oversight & Monitoring

• System Reviews & Internal Audit Plans and Risk Assessment
• Developing and Maintaining System Documentation (policies, procedures, & internal controls)
• Internal Control Monitoring
• Training

This session will focus on contractor purchasing system requirements and the CPSR process and expectations for policies, procedures, and purchasing documentation.

Background

• Purchasing System Definition & Applicability Overview
• Purpose, Scope, and Benefits of the CPSR and Approved Purchasing Systems
• Overview of the Purchasing System Risk Assessment and Key CPSR Scope Considerations

Purchasing System Requirements Overview

• Overview of FAR Part 44 Purchasing System Requirements
• Key Contract Clauses and Applicable Procurement Regulations
• DFARS Purchasing System Criteria Overview & Analysis

CPSR Overview

• Overview of CPSR Process, Timeline, and Data Requests
• Major CPSR Review Elements
• Specific Documentation Expectations
• Identify Policy & Procedure and Internal Control Expectations
• Common CPSR Pitfalls and Best Practices to Mitigate Significant Deficiencies

Purchasing System Monitoring & Maintenance

• Discuss Best Practices in Overall Purchasing System Monitoring & Maintenance
• Procurement File Documentation Review & Remediation
• Policy & Procedure Monitoring
• Training Expectations

This session will present a summary of the business system review process and provide key takeaways for the attendees to bring back to your organization. Participants will have time to get their questions answered.

• Understanding the length and timing of the review process
  • DCAA vs DCMA
• Entrance conference, interim conference and exit conference expectations.
• Tips to work successfully with DCAA/DCMA
• What happens when you get a Corrective Action Request (CAR)
  • Deficiency or significant deficiency
  • How to correct
  • Making a Corrective Action Plan (CAP)
  • Understanding the validation review
• Documentation best practices for all formal communications, status memos, and meetings
• What happens after exit conference and have a finding – now what?
  • Timelines
  • Significant findings vs. less than significant findings
  • System disapproval and fee withholds
• What happens after the audit?
• What happens outside of DOD environment with Fed Civ contracts
• Potential litigation/formal disputes/claims etch