Report | April 30, 2015

Quality Control Review of the PricewaterhouseCoopers LLP, and the DefenseContract Audit Agency FY 2013 Single Audit of The MITRE Corporation

DODIG-2015-112

Objective

As the cognizant Federal agency for the MITRE Corporation (MITRE), we performed a quality control review of the PricewaterhouseCoopers LLP, (PwC) and Defense Contract Audit Agency (DCAA) single audit report and supporting audit documentation for the audit period of October 1, 2012, through September 30, 2013. Our objective was to determine whether the single audit was conducted in accordance with generally accepted government auditing standards, the American Institute of Certified Public Accountants (AICPA) Statements on Auditing Standards, and the requirements of Office of Management and Budget (OMB) Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations." Appendix A contains additional details on our scope and methodology; and identifies prior quality control reviews. Appendix B lists the compliance requirements that PwC and DCAA determined to be applicable to the FY 2013 audit.

Background

MITRE Corporation

MITRE is a private, not-for-profit, corporation that operates six Federally Funded Research and Development Centers (FFRDCs), which assist Federal agencies with research and development, study and analysis, and/or systems engineering and integration. The FFRDCs are sponsored by the Department of Defense, the Federal Aviation Administration, the Internal Revenue Service, the Department of Veterans Affairs, the Department of Homeland Security, the Administrative Office of the U.S. Courts, and the Centers for Medicare and Medicaid Services. During F Y 2013, MITRE expended approximately $1.4 billion in Federal awards, under one Federal program, the research and development cluster. Of the $1.4 billion, approximately $0.8 billion was expended for Department of Defense programs. MITRE engaged PwC and DCAA to perform the FY 2013 single audit.

PricewaterhouseCoopers LLP

PwC, a member firm of PricewaterhouseCoopers International Limited, provides a wide array of business services, including audit and assurance, business and Government consulting, and tax preparation and planning. PwC maintains its own system of internal quality control over its accounting and auditing practices as required by the AICPA. PwC’s office in McLean, Virginia, performed MITRE’s single audit for FY 2013 in coordination with DCAA.

Defense Contract Audit Agency

DCAA operates under the Under Secretary of Defense (Comptroller)/Chief Financial Officer. DCAA maintains five regional offices, a field detachment division (for audits involving DoD classified programs), and a headquarters office in order to provide audit and financial advisory services to the DoD and other Federal agencies responsible for acquisition and contract administration. DCAA’s Northern New England Branch Office and a field detachment office performed MITRE’s single audit for FY 2013 in coordination with PwC.

Single Audit

Public Law 98-502, "The Single Audit Act of 1984," (the Act) as amended, was enacted to promote sound financial management of Federal awards administered by non-Federal entities and to establish a uniform set of auditing and reporting requirements for all Federal award recipients that are required to obtain a single audit. OMB Circular A-133 establishes policies that guide the implementation of the Act and provides an administrative foundation for uniform audit requirements of non-Federal entities administering Federal awards. Entities that expend Federal funds of $500,000 or more in a year are subject to the Act and OMB Circular A-133 requirements. Therefore, they must have an annual single or program-specific audit performed in accordance with generally accepted government auditing standards and submit a complete reporting package to the Federal Audit Clearinghouse in accordance with OMB Circular A-133 requirements. The single audit includes an audit of the non-Federal entity’s financial statements and Federal awards.

Review Results

MITRE complied with OMB Circular A-133 reporting requirements. PwC and DCAA generally met the auditing standards and OMB Circular A-133 requirements. However, PwC provided inaccurate and incomplete information within the data collection form submitted to the Federal Audit Clearinghouse. As a result, Federal agencies may not have been aware of pertinent information affecting their programs.

Management Comments and DoDIG Response

PricewaterhouseCoopers LLP agreed to take corrective action in response to our recommendation. Management comments were responsive and no additional comments are needed. Management comments are included in their entirety at the end of this report.