Defense Contract Audit Agency (DCAA) Audits: Widespread Problems with Audit Quality Require Significant Reform

Abstract

The United States Government Accountability Office (GAO) found audit quality problems at Defense Contract Audit Agency (DCAA) offices nationwide, including compromise of auditor independence, insufficient audit testing, and inadequate planning and supervision. GAO's conclusions stem from a review of 69 audit assignments supporting contract award and administrative decisions; an assessment of DCAA's audit quality assurance structure, which found similar audit quality problems but gave satisfactory ratings to deficient audits; and DCAA's rescission of 80 problem audit reports. The rescinded audits supported decisions on pricing and contract awards and impacted the planning and reliability of hundreds of other DCAA audits, representing billions of dollars in DOD expenditures.