DCAA Series: What Are DCAA Compliance Audits? 5 Types to Know

Aerospace and defense industry contractors are required to meet numerous governmental requirements. These are set forth as parameters for doing business with agencies like the U.S. Department of Defense (DoD) and its partners such as MMAS, ITAR, DCMA, and DCAA.

Of these, the DCAA audit requirements are among the most complex, and the professional compliance specialists at Cre8tive Technology and Design will partner with you to exceed compliance requirements. From understanding the DCAA compliance manual to gathering the data you need for the audit itself, we can make this process as fast and easy as possible.

Achieve DCAA Compliance

What is “DCAA Compliant” and why does it matter?

If your aerospace or defense business wants to do business with the US government, it will need to demonstrate compliance with the guidelines set forth by the Department of Defense. In order to win federal defense contracts, your company needs to achieve and maintain Defense Contract Audit Agency (DCAA) compliance.

As we’ve explained before in our blog, “The DCAA audit process is complex with various types of audit categories. We have a dedicated resource available to address the process, from forward pricing to incurred cost, and other audits. This DCAA compliance manual helps our clients achieve positive results.”

What is a DCAA Audit?

DCAA audits are completed by the Defense Contract Audit Agency (DCAA), a regulatory agency that serves the DoD and other entities with defense contract audits and financial oversight of government contracts. DCAA audit preparation for contractors is commonly preceded by pre-award surveys. Each year, the DOD updates the requirements for DCAA compliance, meaning that you will need to stay ever-vigilant to pass.

The process also includes post-award audits, or a review of incurred costs of the contract. Additional DCAA audit services include providing guidance to negotiating contract officers, auditing business systems and processes, as well as offering custom DCAA audit services when independent voices are needed or a contract accounting system is stuck in a roadblock and needs to be able to proceed.

Types of DCAA Audits

Let’s take a closer look at each of the different types of DCAA audits for compliance that is commonly completed by the agency:

  • Incurred Cost Audits – The post-award audit includes a review of contract costs incurred to understand whether the final cost increased beyond the agreed upon terms, due to inaccurate or non-disclosed cost information. This is completed when a contract price was not fixed upon approval.
  • Forward Pricing Audits – These audits work closely with pre-award surveys in that they are completed before the contract is awarded. The DCAA will address the estimation of the pricing on the contract for what has been proposed, goods to be provided, and/or a review of the accounting process, ahead of the contract completion.
  • System Audits – Aerospace and defense contractors can often have a full review of systems and processes, including accounting, as well as billing and purchasing procedures, time accounting, inventory management, and more.
  • Specialty Audits – The range of specialty DCAA audits varies, but ultimately, they assist contract officers who have specific requests or those seeking an outside opinion on processes, systems, and overarching obstacles to contract completion.
  • Provision of Audit Resources – While not a specific audit, it is important to mention the role the DCAA has in providing compliance resources. This includes guidance from the following:
    • Federal Acquisition Regulation (FAR)
    • Cost Accounting Standards (CAS)
    • Truth in Negotiations Act (TINA)
    • Content Audit Manual (CAM)
    • Correct timesheet information
    • Auditing by desired code
    • Pricing and certified cost information

DCAA audit requirements are just one element of the larger compliance picture. Understanding cost organization, procedures to have in place ahead of audits, and ensuring an ERP has been properly implemented are all tasks that can be supported by an integration partner during your compliance journey.

Cre8tive provides that support to our A&D contract partners. See a comprehensive review of that process in our blog on what you should know about DCAA compliance.

The DCAA and Other Federal Agencies

There are several additional agencies and standards related to the DoD that require additional compliance from contractors in the aerospace and defense industry, such as:

Discover the differences between the DCAA and other agencies in our dedicated resource on the topic.

How Cre8tive Can Help

Understanding DCAA compliance requirements for audits is relative to knowing you have support to achieve full compliance. Aerospace and defense providers have their hands full completing projects efficiently, on time, and on budget. They need to know compliance is taken care of within their workflows.

Cre8tive makes the compliance process easier by integrating powerful ERP software from Epicor Kinetic. As an Epicor Platinum Partner, our implementation teams are trusted from the source to custom configure your solution to achieve compliance, year after year, no matter the stringent regulations that are put forth by the DoD, DCAA, and related agencies.

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Partner with Cre8tive

Put your trust in the expertise of Cre8tive for assistance with comprehensive aerospace and defense compliance. For more information about how we can help your business DCAA audits and other federal regulations, get in touch with our team!

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