DCAA MRD – Risk Assessment and Contractor Corrective Actions

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A recently issued MRD / Audit Alert (http://www.dcaa.mil/mmr/15-PAS-009.pdf) directs the DCAA to consider as part of their audit planning and contractor risk assessment process corrective actions implemented by the contractor related to prior audit findings.

This requirement to consider corrective actions undertaken by the contractor should not be used only for audit planning purposes which would limit the application to a prospective basis.  This same procedure should also be utilized in conjunction with active audits, when applicable.  For example, if deficiencies are noted when conducting a business system audit, the contractor should receive credit if an active and ongoing monitoring or self assessment plan with related corrective actions is in place.  Notwithstanding the existence of deficiencies, the business system as a whole may nevertheless be deemed adequate – depending on the nature of the inadequacies.  An active and robust monitoring system will assist in that ultimate determination.

Ongoing corrective actions as an element of a formal monitoring plan also help with establishing favorable contractor responsibility determinations and can be very advantageous when things go wrong and the contractor is faced with potential debar or suspend actions from or settlement negotiations with the government.

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