The Department of Defense (DoD) is the only executive agency that has never passed a financial statement audit. Since the 1990 CFO Act, the Pentagon has made significant improvements in accountability. But, the DoD has been unable to satisfy the auditors on the accounting of their assets and inventory.
The Defense Industry has been following this Audit Initiative for years looking for signs from the Pentagon as to the seriousness of the situation. At this point, Government Contractors would be foolish to think that this initiative will magically disappear. Instead, they should embrace this initiative and develop internal systems to be prepared for an audit.
Asset Accountability
Full financial statement audits are more than an investigation into accounting and the financial ledger. This is a department-wide initiative that demands accountability for all qualifying assets and inventory. Furthermore, it should be pointed out that currently government property auditors or Program Offices are able to schedule site visits within 10 business days.
Defense auditors will verify the “book-to-floor” and the “floor-to-book” records of qualifying assets. Meaning that they will verify that the physical assets on the floor match the records in the books, and that the records are complete and matching inventory in the contractors’ possession. This confirmation of asset existence and completeness is critical to full accountability and fiscal responsibility being demanded by Congress — but, is no easy task for a contractor to be able to fulfill.
Why the Defense Audit Matters to Government Contractors
Government contracts come in all different shapes and sizes — but, needless to say, there are a significant number of contracts where a contractor will maintain Government property in order to fulfill their specific contract obligations.
When a contractor maintains Government property they are almost always obligated to identify, mark, track and report lifecycle changes and other asset data through to the appropriate government systems. This government property management obligation is referenced in the FAR clause 52.245-1. As a government contractor, you should always look for this obligation on a contract by contract basis.
Furthermore, contractors are obligated to maintain a Government Property Management system. This is one of the six key business systems covered by the DoD’s Contractor Business Systems regime (DFARS 252.242-7005). The other business systems include: Accounting, Estimating, Material Management and Accounting, Purchasing and Earned Value Management. Failure to comply with any of these Business System requirements can result in withholding of payments to the contractor.
Government Property Management Business System for Costpoint
A2B Tracking has been offering a Government Property Management solution for years that provides complete record keeping of GFP, asset management, full IUID Compliance, as well as automated data exchange to government systems such as WAWF, GFP Module and PCARSS.
In 2018 we partnered with Deltek to provide platform integration with Deltek Costpoint’s Fixed Assets Module. This direct integration provides a Government Property Management business system to Costpoint users.
Deltek Costpoint is the leading ERP software for government contractors to manage project accounting, labor and manufacturing to improve business efficiencies. Over 23,000 organizations in over 80 countries around the world rely on Deltek to optimize resources and streamline operations.
Today’s defense contractors need to have business systems in place to help them achieve compliance to Defense Contract Audit Agency (DCAA), for financial estimating and accounting. But, they also need to have business systems to support compliance to Defense Contract Management Agency (DCMA) audits, for physical assets.
Sustained Audit Readiness
These modern business systems (Accounting, Purchasing, Government Property Management…) are complex and integral to the core contract obligations for government contractors today. Sustained audit readiness is not easy and requires buy-in from the entire organization to achieve. Government property can not be managed by one department with a spreadsheet, or a clipboard.
Being able to combine A2B Tracking’s Government Property management capabilities with a direct integration to Costpoint’s project-based enterprise software solution is a win for everyone. This integration provides IUID compliance along with robust audit trails for complete lifecycle asset management to meet the FAR 52.245-1 obligation.
To learn more about the A2B Tracking – Costpoint Integration watch our Integration video, or download our brochure here. To research the benefits that A2B Tracking can provide Costpoint users, take a look at the A2B Tracking Partner page in the Deltek Marketplace. Or you can always schedule a discovery call to speak with one of our Government Property experts to discuss the details of your program.
