Accounting Paper

With the recent terrorist activities there is an increase in federal spending. Federal government funds are a limited resource expended to benefit the country in areas such as social issues, national defense, homeland security, and natural disaster relief. As a result there are more and more reports of government spending abuses, waste, and fraud. In my paper I will address federal contracting audits.

Over the last few years, spending on federal contracts was the fastest-growing part of the discretionary budget. The U.S. government is the largest consumer of prime contracts. As a result of this increase, federal contractor fraud is increasing at an alarming rate. Thus, there is a need for more scrutiny and more emphasis on compliance and performance within federal contracting and by internal and external auditing agencies.

The accounting, auditing, and investigative agency for the federal government is the Government Accountability Office (GAO). It uses the Generally Accepted Government Auditing Standards (GAGAS) to guide its audits. The Defense Contract Audit Agency (DCAA) is charged with a critical role in Department of Defense and other federal agency contractor oversight by providing auditing, accounting, and financial advisory services. DCAA contract audits are intended to be a key control to help ensure that prices paid by the government for needed goods and services are fair and reasonable and that contractors are charging the government in accordance with applicable laws.

The Government Accountability Office (GAO) has issued reports that showed inadequacies in the DCAA's performance of audits. This was followed up with another GAO investigation that indicated a widespread problem within the DCAA organization. As a result the DCAA went through 3 directors in a little over a year. The report stated that DCAA’s mission statement, strategic plan, and metrics all focused on producing a large number of audit reports and provided...