After a tortuous journey lasting nearly two years, I published a new article in the May edition of West's Government Contracts Costs, Pricing & Accounting Report (edited by Karen Manos, Esq.). It addressed challenges posed by DCAA's approach to auditing contractor disclosures made pursuant to the requirements of the 52.203-13 contract clause. You can find the article under "knowledge resources" on this site.

But of course you must be a member in order to access that part of the site. Membership has privileges, after all.

Thank God the article was published in mid-May, because just a couple of weeks later the DCAA website was updated with new audit guidance that mooted much if not all of my points.

The new audit approach outlined in the MRD (link above) triages contractor disclosures based on risk and creates a more efficient audit process for those contractor disclosures that are risky enough to warrant an audit.

The first step in the new audit approach is for the Justice Liaison Auditor (JLA) at Fort Belvoir to evaluate each contractor disclosure received from the DOD Inspector General. The JLA will classify each contractor disclosure into an "Information Notification" or an "Action Required Notification." The JLA will consider "the nature of the violation being disclosed; the impact or damage to the Government; the impact on current or future audit planning; and the potential that an audit or an assessment could impact ongoing criminal or civil investigations."

When formal action is requested via an Action Required Notification then the FAO "will not be required to conduct a GAGAS compliant examination of the disclosure as an immediate response. Instead, the FAO will establish an assignment using DMIS Activity Code 17920 and conduct a disposition analysis to determine the best course of action to address the disclosure. Follow the guidance discussed in CAM 4-707 for general procedures for a disposition analysis. The FAO will (generally) have 60 days to disposition each Notification it receives from the JLA.

The FAO can disposition the ARN without too much in the way of follow-up activity. The CAM states:

An auditor may conclude that a contractor disclosure is other than high risk only after the completion of a disposition analysis. A documented disposition analysis will ensure our audit resources are efficiently used while fulfilling our audit responsibilities under the program.

a. Some examples of criteria for assessing the risk of a contractor's disclosure while performing a disposition analysis may include:

(1) the nature of the subject matter disclosed,

(2) financial or monetary degree of damage to the Government,

(3) prior significant deficiencies noted on the relevant control environment, and

(4) the contractor's degree of compliance with the Contractor's Code of Business

Ethics and Conduct Program (see CAM 5-306)

There are more details in the CAM (now). If you are dealing with a contractor disclosure, you really need to read that new section in the CAM to understand the new DCAA audit approach.