Welcome to Survival Guide for a USAID-Incurred Cost Audit Performed by a Commercial Accounting Firm

Transcription

1 Welcme t Survival Guide fr a USAID-Incurred Cst Audit Perfrmed by a Cmmercial Accunting Firm Presented by: Gelman, Rsenberg & Freedman CPAs and Mrris, Manning & Martin, LLP Please nte: Use the Questin panel t speak with the administratr if yu experience any technical issues while lgging int GTWebinar. Fr the best audi quality, please call-in by phne vs. cnnecting via yur cmputer. Call: +1 (213) Access cde/event number:

2 Husekeeping CPE Credit Imprtant: Three (3) CPE wrds will be prvided during the presentatin. Please write them dwn we will nt prvide them again via GTWebinar r (n exceptins). Please cmplete the electrnic survey that will appear autmatically at the end f the webinar. Turn ff yur pp-up blcker (leaving it n culd blck the survey). Attendees seeking CPE fr this presentatin must cmplete the survey and enter all three CPE wrds. Yu cannt claim CPE unless we receive a cmpleted evaluatin with the crrect wrds. Technical questins abut the survey can be addressed t Dminic Acsta at dacsta@grfcpa.cm. 2

3 Husekeeping General Infrmatin/Technical Questins We strngly recmmend that yu cnnect by phne instead f yur cmputer fr the best audi quality. Call +1 (213) The event number is Please use the Questin panel fr any technical questins, r yu may cntact Dminic Acsta at dacsta@grfcpa.cm. This presentatin will be recrded and made available t dwnlad at /webinars and. 3

4 Husekeeping Webinar Objectives Learning Objective T understand the USAID incurred cst audits Recmmended CPE 1.0 CPE Credit Prerequisites Nne required Prgram Level Basic Refund Plicy N fee is required t participate in this sessin. Instructinal Delivery Methds Grup Internet-based Recmmended Fields f Study Accunting Advance Preparatin Nne Curse Registratin Requirements Nne Cancellatin Plicy In the event that the presentatin is cancelled r rescheduled, participants will be cntacted immediately with details. Cmplaint Reslutin Plicy Gelman, Rsenberg & Freedman CPAs is cmmitted t ur seminar participants 100% satisfactin and will make every reasnable effrt t reslve cmplaints as quickly as pssible. Please cntact kdavis@grfcpa.cm with any cncerns. Disclaimer This webinar is nt intended as, and shuld nt be taken as, financial, tax, accunting, legal, cnsulting r any ther type f advice. Readers and users f this webinar infrmatin are advised nt t act upn this infrmatin withut seeking the service f a prfessinal accuntant r lawyer. 4

5 Hw t Survive a USAID-Incurred Cst Audit Perfrmed by a Cmmercial Accunting Firm Presented by: March 7, 2019 Presenters Mderatr Paul H. Calabrese Andrew J. Mhr, Esq. C. Kelly Krll, Esq. Jhn R. Pace, CPA, CVA Principal Partner Of Cunsel Partner and Directr Gelman, Rsenberg & Freedman CPAs Mrris, Manning & Martin, LLP Mrris, Manning & Martin, LLP Gelman, Rsenberg & Freedman CPAs

6 Speakers Paul H. Calabrese GRF Principal Andrew Mhr, Esq. MMM Partner C. Kelly Krll, Esq. MMM Of Cunsel 6

7 Surces DCAA Cntract Audit Manual - %20and%20auditing%20techniques USAID ADS (Autmated Directives System) 590 and 591 Federal Acquisitin Regulatins (FAR) - 7

8 Overview USAID Incurred Cst Audit Perfrmed by Cmmercial Firm USAID incurred cst audits Client prblems with cmmercial firm audits n behalf f USAID DCAA best practices interfacing with cntractrs during the audit prcess Audit survival checklist Hw d yu respnd t a Cntracting Officer s decisin and the appeals prcess with USAID Hw des the Cntracts Dispute Act wrk What is a valid claim 8

9 Pll Questin #1 Have yu been/will be audited by USAID using a private public accunting firm fr an incurred cst audit instead f DCAA? A) Yes B) N

10 Incurred Cst Audits with USAID Incurred cst audits are an annual settlement f indirect rates and direct csts by cntract With USAID, a civilian agency, they have had a MOU since 1998 t use DCAA t perfrm audits per ADS In recent years DCAA was backlgged in perfrming their wn audits, much less USAID and NDAA required them t suspend helping ther agencies, which has been repealed USAID in the funding f these audits per ADS states either DCAA r by independent public accuntants (cmmercial) firms 10

11 Client Experience with Cmmercial Firms DCAA is reimbursed fr USAID audits and has a large ftprint in place Cmmercial firms must perfrm within their cntracted rates r price Seems like the cmmercial firms have: A strng CPA wh versees the entire audit prcess as a Q/C A fairly experienced manager t run the audit Less experienced r inexperienced auditrs t perfrm the wrk, i.e. senirs Retainage f senirs is difficult and culd lse prtins f the team during the audit 11

12 Pll Questin #2 Our biggest cncern with cmmercial firms is the auditrs: A) cmmunicatin during the audit prcess B) wait until the end t infrm us f unsupprted csts C) give us a week r less t respnd t their findings D) did nt perfrm a walk-thrugh t understand the prcess E) did nt prvide sufficient details f their findings

13 Dysfunctinal Audit Multi-year incurred cst audit Ntified Nvember 2016 Fieldwrk: Private firm started in March 2017 with a 3-day entrance cnference (4 mnths later) N interactin until a 1-week visit in July 2017 (4 mnths later) Anther 1-week visit in August 2017 (1 mnth later) Changed entire audit team in August

14 Dysfunctinal Audit Cntinued Changed prcedure fr ntifying auditees Summary f draft findings within a week after the field visit N findings prvided until the cmpletin f all runds f internal reviews within private firm with n specific timeline Did nt receive any ntificatin frm private firm fr 6 mnths until March 2018 Wanted t have an exit cnference with 3 days ntice Audit firm prmised an agenda 1 day befre exit cnference N cmmunicatin f findings fr 12 mnths since first initiated fieldwrk 14

15 Dysfunctinal Audit Cntinued Exit cnference Cnference call with audit team, nt in persn nr vide cnference 1 day befre exit cnference they received the summary f findings First time they heard abut any findings and questined cst Nne f the findings had any detail as t: Nt sufficiently descriptive Hw the questined amunts were determined Client unable t respnd t findings/questined cst in a meaningful way 15

16 Dysfunctinal Audit Cntinued Pst Exit cnference Had 7 days t respnd t several findings Client chse nt t respnd t auditr but t USAID directly based n final audit reprt Client requested audit wrkpaper schedules fr the basis f findings frm auditrs USAID sent a letter One fr direct csts questined frm Cntract Audit Management Team One fr indirect csts questin frm Overhead, Special Cst and Clseut Team 16

17 Dysfunctinal Audit Cntinued Settlement Almst 3 years frm the initial ntificatin Other Client Settlement with same cmmercial audit firm Same cmmercial firm questined $1,445,000 Settled with zer cst questined Anther firm imprperly audited a T&M cntract by treating it as CPFF 17

18 Frmalizing the Audit Prcess Cntrl the engagement Cntrl the scpe Nn-Disclsure Agreement (NDA) with cmmercial audit 18

19 DCAA Best Practices Interfacing with Auditee Entrance cnference DCAA Cntract Audit Manual (DCAM) Explain the purpse f the audit Overall plan fr the perfrmance f the audit Estimated duratin The types f recrds and data required t perfrm the audit Perfrm a walk-thrugh during the entrance cnference Cntractr fully explains the incurred cst submissin t allw the auditrs t ask questins s that there is a gd understanding as they start the audit 19

20 DCAA Best Practices Interfacing with Auditee (cntinued) Interim Cnferences DCAM Thrughut the audit, the auditr shuld discuss matters with the cntractr as necessary t btain a full understanding and the basis f each part f the incurred cst submissin The auditr shuld discuss preliminary audit findings T ensure that audit cnclusins are based n a cmplete understanding f pertinent facts These discussins d nt impair auditr independence Are necessary t btain sufficient evidence t supprt audit cnclusins/questined csts 20

21 DCAA Best Practices Interfacing with Auditee (cntinued) Exit Cnference DCAM Upn cmpletin f fieldwrk, hld an exit cnference T discuss the audit results Obtain cntractr s views cncerning the findings, cnclusins, questined cst, recmmendatins T be included in the audit The auditrs will cmment n the cntractr s respnse t the audit results 21

22 DCAA Best Practices Interfacing with Auditee (cntinued) Exit Cnference DCAM Invite requestr/usaid audit grup Even if there are n deficiencies r questined cst, it is a curtesy t hld an exit cnference Infrmatin prvided t the cntractr r in anticipatin f the exit cnference Draft reprt Prvide cncurrently with the requestr and cntractr N specified time requirement fr cntractr s respnse 22

23 Audit Survival Checklist 1. Realize yu cannt cntrl the auditr r the audit 2. Frmalize the audit prcess 3. Establish a prime and alternate pint f cntact, t interface with the auditrs 4. Knw the audit prcess in rder t keep the auditrs n track 5. Dcument the audit 6. During the entrance cnference, btain the name, title and cntact infrmatin fr the persn wh is in charge f the audit, i.e. audit manager, fr ptential prblems 23

24 Audit Survival Checklist Cntinued 7. Take cntempraneus ntes during all meetings with the auditrs, recrd the date 8. Be very practive with the auditr during all phases f the audit 9. If the auditr will nt agree r permit the inclusin f yur facts, USAID will 10. Yur respnse t findings r questined cst shuld be well-rganized 11. Retain cnsultant agreements 12. Maintain tp level, well-rganized, well-preserved recrds and dcuments 24

25 Cntract Disputes Act (CDA) Cntracting Officers can negtiate and enter int settlement agreements. This is true at any time including after the submissin f a claim If the parties can t agree then the CDA and the Disputes Clause at FAR cme int play FAR utlines the minimum requirements fr submitting a claim 25

26 Pll Questin #3 If yu have audit findings, are yu having difficulty preparing a respnse? A) Yes B) N

27 FAR A claim must: Be in writing t the cntracting fficer Seek, as a matter f right, the payment f mney in a sum certain, the adjustment f cntract terms, r ther relief arising under the cntract Include the required certificatin language if the claim exceeds $100,000 27

28 Timelines Claims must be submitted t the cntracting fficer within six years after accrual D nt wait, hwever After submissin, there is a 60 day perid t reply r ask fr mre time After 60 days if there is n respnse this is cnsidered a deemed denial frm which an appeal can be taken 28

29 Appeals FAR Subpart days t file t the apprpriate Bard f Cntract Appeals r within 12 mnths t the United States Curt f Federal Claims ADR Prs and Cns assciated with each 29

30 Questins 4550 Mntgmery Avenue, Suite 650N Bethesda, MD Eye Street, N.W., Suite 600 Washingtn, D.C Paul H. Calabrese Principal, Outsurced Accunting and Advisry Services Andrew Mhr, Esq. Partner C. Kelly Krll, Esq. Of Cunsel

31 GRF s GvCn Webinar Series: Part 3 Develping Annual Indirect Rates Using the DCAA ICE Schedule March 12 12:00 1:30 pm Mre infrmatin and registratin at /resurces/webinars T receive updates and additinal infrmatin regarding Mrris, Manning & Martin, LLP practice areas and events, we invite t subscribe t ur newsletter by cmpleting the frm lcated here:

32 Disclaimer This webinar is nt intended as, and shuld nt be taken as, financial, tax, accunting, legal, cnsulting r any ther type f advice. While we use reasnable effrts t furnish accurate and up-t-date infrmatin, we d nt warrant that any infrmatin cntained in r made available in this webinar is accurate, cmplete, reliable, current r errr-free. We assume n liability r respnsibility fr any errrs r missins in the cntent f this webinar. The use f the infrmatin prvided in this webinar des nt establish any cntractual r ther frm f client engagement between Gelman, Rsenberg & Freedman P.C., Mrris, Manning & Martin, LLP and the reader r user. Any U.S. federal tax advice cntained in this webinar is nt intended t be used fr the purpse f aviding penalties under U.S. federal tax law. Readers and users f this webinar infrmatin are advised nt t act upn this infrmatin withut seeking the service f a prfessinal accuntant r lawyer.