DCAA has issued guidance reminding auditors that the executive compensation caps established by the Office of Management and Budget each year (currently $473,318) should usually not apply to smaller firms where “reasonable” executive compensation should be lower.  The Mid-Atlantic Region of DCAA has a special expert compensation team that has spent considerable dollars on compensation surveys and the guidance reminds auditors that they can refer questions related to reasonableness of compensation, bonuses, incentives, severance, fringe benefits and deferred compensation to the team (05-PPD-046(R).  (Editor’s Note.  As a former auditor out of the Mid-Atlantic Region who has frequently used the services of the special compensation team, this reporter can vouch for their expertise where full time auditors serve long periods of duty with the team.  We often find that local DCAA offices take positions on executive compensation that some contractors believe to be unreasonable and in those cases, we recommend you consider asking your local auditor to review their position with the Mid-Atlantic compensation team to get another opinion.)

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