GAO Report Finds Widespread Problems at Defense Contract Audit Agency

The Government Accountability Office (“GAO”) recently issued a report finding widespread problems with the quality of audits conducted by the Defense Contract Audit Agency (“DCAA”).  The DCAA under the Department of Defense (DOD) Comptroller plays a critical role in defense contractor oversight by providing auditing, accounting, and financial advisory services in connection with DOD and other federal agency contracts and subcontracts.

Last year, GAO found numerous problems with DCAA audit quality at three locations in California, including the failure to meet professional auditing standards.  In this latest report, GAO found audit quality problems at DCAA offices nationwide, including compromise of auditor independence, insufficient audit testing, and inadequate planning and supervision.  GAO found DCAA’s management environment and quality assurance structure were based on a production-oriented mission that put DCAA in the role of facilitating DOD contracting without also protecting the public interest.

To address these system-wide problems at DCAA, the GAO made a number recommendations ranging from possible Congressional action to 15 suggested changes at the DCAA that could be implemented by, or through, the Secretary of Defense.

A copy of the GAO Report, 09-468, can be viewed on the Internet at http://www.gao.gov/new.items/d09468.pdf