Re: Auditing of Fixed Price Contracts Herbert B. Chermside 01 Sep 2000 10:59 EST
The pricing methodology of a fixed price, or fixed unit price contract offer toa federal agency is auditable. Once the contract is let, the billings are auditable only to determine that the deliverables were met. Expressly, allowability cannot be examined. HOWEVER, questions of fraud override this freedom from audit. This could arise if most of your activities are cost reimbursable, and a few fixed price agreements get a lot of otherwise unallowable costs related to other projects get dumped on them. In practice, you should let your system (presuming it passes a A-133 audit) work routinely for the account and just override on an occasional cost which is morally/ethically (do auditors understand those words?) related to the fixed price agreement but not routinely allowable. The handling of fixed price agreements can be looked at in general in a broad system audit, but not from the point of view of identifying specific unallowable costs on that agreement. Also think through your CAS DS-2 disclosure. If you make your cost estimate in accordance with your cost principles (which you can be audited about), then you should accumulate costs essentially similarly, to be consistent. In short, only a fey oddball costs should get into a fixed price agreement. You used the word "fee" -- I always understand that to mean the "profit" of a commercial concern in the federal contract lexicon. In this case, technical legality needs to be tempered with good sense. Chuck At 10:21 AM 9/1/00 -0400, you wrote: >I would appreciate hearing your views on whether fixed price agreements >containing federal dollars are generally subject to fiscal audit, in >particular the allowability of expenditures regarding cost accounting >standards. By fixed price I mean agreements where payments are triggered by >the completion of tasks, deliverables, or milestones with a fixed fee >attached to each, rather than reimbursement of actual expenditures. I'm >interested in contracts you receive as well as the subcontracts you write to >your subrecipients. Any thoughts, experiences, practice vs. rules, etc. are >welcome. Thanks. > > >====================================================================== > Instructions on how to use the RESADM-L Mailing List, including > subscription information and a web-searchable archive, are available > via our web site at http://www.hrinet.org (click on "Listserv Lists") >====================================================================== Herbert B. Chermside, CRA Director, Sponsored Programs Administration Virginia Commonwealth University PO BOX 980568 Richmond, VA 23298-0568 Express Delivery Only: Sanger Hall, Rm. 1-073 11th & Marshall Streets Richmond, VA 23219 Voice: 804-828-6772 Fax 804-828-2521 OFFICE e-mail xxxxxx@VCU.EDU Personal e-mail xxxxxx@vcu.edu http://views.vcu.edu/ospa/ ====================================================================== Instructions on how to use the RESADM-L Mailing List, including subscription information and a web-searchable archive, are available via our web site at http://www.hrinet.org (click on "Listserv Lists") ======================================================================