Report | March 7, 2013

Monitoring of the Quality of the Defense Contract Audit Agency FY 2010 Audits


What We Did

We performed quality assurance reviews on 50 Defense Contract Audit Agency (DCAA) reports issued during the first half of FY 2010. We evaluated assignments from all five DCAA regions and the Field Detachment to determine compliance with government auditing standards and DCAA policies and procedures. The completion of this report was substantially delayed due to the shift in our primary oversight of DCAA from reviews of audit quality to the review of hotlines during the period January 2010 through January 2012.

What We Found

DCAA did not exercise professional judgment in performing 37 (74 percent) of the 50 FY 2010 assignments reviewed. DCAA performed much of the field work on the reviewed assignments prior to FY 2010. The abundance of non-compliances with standards identified in the 37 assignments evidenced the need for improvements in the area of competence at DCAA.

Significant quality issues identified included external impairments to independence, inadequate planning, poor communications with the requester and contractor, insufficient evidence, unsupported or untimely reports, poor documentation, and ineffective supervision and quality control. DCAA stated that the reviewed assignments could still evidence the residual effects of the production-oriented environment that previously existed. Since FY 2009, DCAA has taken various corrective actions such as revising training class curriculums, requiring additional training for all audit staff, and revamping audit programs and guidance. We will evaluate the effectiveness of these actions during future reviews.

What We Recommend

We recommend that DCAA consider rescinding or supplementing certain reports, and taking other appropriate actions on the 37 assignments. We also recommend that DCAA reassess various policies, procedures, and training and revise them, as appropriate, to improve audit quality and compliance with government auditing standards.

Management Comments and Our Response

DCAA management comments were generally responsive. DCAA considers corrective actions completed on 17 recommendations. Based on management comments, we deleted draft Recommendation 4 and revised draft Recommendation 12.a, now 11.a. We also clarified three findings. We request that DCAA provide additional comments on 7 recommendations. Please see the recommendations table on the back of this page.