DCAA

Term Definition
DCAA is the Defense Contract Audit Agency. The Defense Contract Audit Agency, under the authority, direction, and control of the Under Secretary of Defense (Comptroller), is responsible for performing all contract audits for the Department of Defense, and providing accounting and financial advisory services regarding contracts and subcontracts to all DoD Components responsible for procurement and contract administration. These services are provided in connection with negotiation, administration, and settlement of contracts and subcontracts. DCAA also provides contract audit services to some other Government Agencies.

Initially, the various branches of the military had their own contract audit function and associated instructions and accounting rulings. Uniformity was non-existent. Contractors and government personnel recognized the need for consistency in the areas of contract administration and audit.

The Navy and Army Air Corps made the first attempt to perform joint audits in 1939. By December 1942, the Navy, Army Air Corps, and Ordnance Department had established audit coordination committees for selected areas where plants were producing different items under contracts for more than one service.

On June 18th 1952, the three military services jointly issued a Contract Audit Manual (CAM). The Manual prescribed detailed policies and procedures for use in auditing procurement contracts. Because of differences between the procurement organizations and practices of the services, finalizing standard guidelines was difficult.

In May 1962, Secretary, Department of Defense, Robert S. McNamara instituted "Project 60" to examine the feasibility of centrally managing the field activities concerned with contract administration and audit. An outcome of this study was the decision to establish a single contract audit capability.

On January 8th 1965, the Defense Contract Audit Agency (DCAA) was formed. Mr. William B. Petty, formerly the Deputy Comptroller of the Air Force, was selected as the Director with Mr. Edward T. Cook, formerly the Director of Contract Audit for the Navy, selected as the Deputy Director.

Organizations must have effective systems for project governance and compliance. Compliance threats can jeopardize projects, its executives and the company where there are intentional or unintentional violations of government, industry and accounting regulations such as employment wage laws, family and medical leave acts, and generally accepted accounting principles for project related matters such as revenue recognition, work in progress and what projects to capitalize or expense.

Area of Application
Compliance