Audit of the Adequacy of
Disclosure Statement, Revision Number 8
November 2003
Reference
Number: 2004-1C-018
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 24, 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 of Disclosure
Statement, Revision Number 8 (Audit #20041C0209)
The
Defense Contract Audit Agency (DCAA) examined the contractor’s revised
disclosure statement, Revision Number 8, dated October 8, 2003. The purpose of the examination was to
determine whether the contractor’s revised disclosure statement adequately
described the cost accounting practices that the contractor proposes to use in
performing Government contracts, and whether the revised practices comply with
applicable Cost Accounting Standards and Federal Acquisition Regulation Part
31.
The
DCAA opined that the contractor’s revised disclosure statement adequately
describes the contractor’s current cost accounting practices. According to the DCAA, the revision is
effective as of March 29, 2003.
However, the DCAA expresses no opinion on the contractor’s compliance
with the revised practices.
The
DCAA stated that the contractor is responsible for submitting cost impact
proposals and for engaging in negotiations of adjustments resulting from
changes to its disclosed accounting practices.
The DCAA also stated that it is not practical to estimate the magnitude
of the total cost impact for the changes in the revised disclosure statement
prior to obtaining this information from the contractor. Additionally, the DCAA indicated that the
contracting parties have not agreed to unilateral changes. Therefore, terms and conditions are subject
to negotiation.
In
the Contractor Organization and Systems section of their report, the DCAA
continues to express opinions that the contractor’s budget and planning,
estimating, indirect and other direct costs, and billing systems are
inadequate, and that the DCAA will perform follow-up audits of these systems
upon completion of corrective actions taken by the contractor.
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.