Audit of the Adequacy and
Compliance of Disclosure Statement, Revision Number 7
November 2003
Reference
Number: 2004-1C-012
This report has cleared the Treasury Inspector General For
Tax Administration disclosure review process and information determined to be
restricted from public release has been redacted from this document.
November 12, 2003
MEMORANDUM FOR DAVID A. GRANT
DIRECTOR OF PROCUREMENT
INTERNAL REVENUE SERVICE
FROM: Daniel R. Devlin /s/ Daniel R. Devlin
Assistant Inspector General
for Audit (Headquarters Operations and
Exempt Organizations
Programs)
SUBJECT: Audit of the Adequacy and Compliance of
Disclosure Statement, Revision Number 7 (Audit #20041C0207)
The
Defense Contract Audit Agency (DCAA) examined the contractor’s revised
disclosure statement, Revision Number 7, dated May 12, 2003. The purpose of the examination was to
determine whether the contractor’s Civil Division’s revised disclosure
statement, dated May 12, 2003, adequately described the cost accounting
practices that the contractor proposed to use in performing Government
contracts, and whether the revised practices comply with applicable Cost
Accounting Standards (CAS) and Federal Acquisition Regulation (FAR) Part 31.
The
DCAA opined that the disclosure statement, Revision Number 7, did not
adequately describe the contractor’s revised cost accounting practices. Additionally, the DCAA stated that due to
significant inadequacies, the DCAA is currently unable to evaluate the
disclosure statement revision for compliance with applicable CAS and FAR Part
31. The DCAA cited seven inadequacies
in the contractor’s disclosed accounting practices, including the Material
Handling Allocation Base cost elements, computer usage charges in relation to
the General and Administrative Allocation Base, and the use of pre-determined
billing or costing rates in the Service Center and Expense Pool Allocation
Base. The DCAA recommends that the
contractor be required to resubmit a revised disclosure statement.
The
information in this report should not be used for purposes other than those
intended without prior consultation with the Treasury Inspector General for Tax
Administration regarding their applicability.
If you have any questions, please
contact me at (202) 622-8500 or John R. Wright, Director at (202) 927-7077.
Attachment
NOTICE:
The Office of Inspector General for Tax Administration has
no objection to the release of this report, at the discretion of the contracting
officer, to duly authorized representatives of the contractor.
The contractor information contained in this report is
proprietary information. The
restrictions of 18 U.S.C. § 1905 must be followed in
releasing any information to the public.
This report may not be released without the approval of
this office, except to an agency requesting the report for use in negotiating
or administering a contract with the contractor.
The TIGTA seal was removed due
to its size.