Proposed Rule is Being Prepared to Have DOD Contractors Self-Certify Their Business Systems
Though the new proposed rule is not yet finalized an abstract has been put out that provides that the DFARS will be amended to require contractors to provide reports on their accounting systems, estimating systems and material management accounting systems regarding their compliance with DFARS system requirements. The rule is apparently being driven by DCAA who does not have the resources to adequately audit all large contractors who are covered by the business system requirements of DFARS. The change would require the contractor to hire an outside CPA firm to complete full audits of all business systems similar to those conducted by DCAA where the result will be more timely audits but increased costs for contractors. Commentators are saying contractors will have a hard time recovering the costs for these audits in the current environment of pressure to reduce indirect costs and will also have a hard time finding qualified CPA firms with the government contracting experience to conduct these audits. Though the rule is not yet published there is already increasing pressure for contractors to ensure they are in compliance with business system requirements where recently, the Department of Energy is making a move toward self-assessment of contractors’ business systems.
