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DCAA UpdateDCAA UpdatePresented for NCMA Cape Canaveral Presented for NCMA Cape Canaveral

ChapterChapterApril 9, 2008April 9, 2008

Government Contracting Consulting Services GroupGovernment Contracting Consulting Services Group

Worldwide Consulting

K.D. “Ken” Bricker, CPA, DABFASenior Partner

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DCAA Audit Results

• 2002 Results• Pricing Proposals (123 B)• Incurred Costs (88.4 B)• Net Savings (5 B)• Budget (390 M)• Tax Payer Savings 6.4 to 1

• 2005 Results• 9,673 Pricing Proposals

(150.7 B)• Incurred Costs (118.7 B)• Net Savings (2.7 B)• Budget (435 M)• Tax Payer Savings 6.2 to 1

WWW.DCAA.MIL

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Fiscal Year 2003 2004 2005 2006

No. of Reviews 41,114 39,705 39,021 35,610

Sustention Rate 66.4% 75.2% 56.4% 63.5%

Return on Investment

$5.4 to 1 $5.0 to 1 $6.2 to 1 $5.2 to 1

Summary of DCAA Audit ResultsSummary of DCAA Audit ResultsPrior Complete Years and FY 2006 Prior Complete Years and FY 2006

ResultsResults

$2.2 $2.1

$2.7$2.3

Net

Sav

ings

Net

Sav

ings

(in

Bill

ion

s)(i

n B

illio

ns)Effective

Auditing ProducesResults

EffectiveAuditing

ProducesResults

*Slide accredited to the DCAA

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Improve e-mail protocol processesComplete 100% of the DCAA controllable incurred cost auditsIncrease MOCAS transaction based volume of electronic billings on cost vouchers to 85%Conduct a study of lessons learned in contract audit **more laterEvaluate current approach to training audit staff and assess training needs / enhance leadership trainingEvaluate success in passing CPA examEvaluate workflow into and within FAODevelop improvements for coordination in planning and performing incurred cost audits **more laterAssess the effectiveness of defective pricing audit planning and execution ***could be problems, more laterAnalyze incurred cost and forward pricing audit guidance including audit programs **more laterAchieve 10% reduction in costs of COTS software and on-line subscriptionsMultiple feasibility studies

DCAADCAAStrategic Plan Goals to be Completed Strategic Plan Goals to be Completed

in or by Program Year Ended in or by Program Year Ended September 30, 2007September 30, 2007

(The Year of Self Improvement?)(The Year of Self Improvement?)

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Audit FocusAudit Focus

• Executive Compensation• Financial Capability• Internal Controls• Professional Services

• Teams to Determine What is Being Missed

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Executive Executive CompensationCompensation

Ceilings:– 1997 $250,000– 1998 $340,650– 1999 $342,968– 2000 $353,010– 2001 $374,228– 2002 $387,783

– 2003 $406,273– 2004 $432,851– 2005 $473,318– 2006 $546,689– 2007 $597,912

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SurveysSurveys• Dietrich• DRI• ECS• ERI• EXEC• Hays• RIA• Watson Wyatt

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JUSTIFYING JUSTIFYING COMPENSATIONCOMPENSATION

• Executives Roles (Multiple?)• Benefit to company – therefore the

government• Escalation • Full Benefit Package• Percentile• Income Tax Payments

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QUESTIONS?QUESTIONS?