Evaluation of Incurred Cost Audits Performed by Non Federal Auditors for Compliance with Government Auditing Standards (Report No. DODIG 2025 062)

Evaluation of Incurred Cost Audits Performed by Non Federal Auditors for Compliance with Government Auditing Standards (Report No. DODIG-2025-062)

Evaluation

The objective of this evaluation was to determine whether non-Federal auditors complied with Government Auditing Standards and other professional standards when they performed audits of DoD contractor incurred costs. The Defense Contract Audit Agency (DCAA) performs audits of DoD contractors. To help eliminate a DCAA backlog of incurred cost audits, the FY 2018 National Defense Authorization Act required the use of non-Federal auditors to perform incurred cost audits of DoD contractors. We evaluated a nonstatistical sample of 16 incurred cost audits performed by non-Federal auditors from October 1, 2018, through September 30, 2022, focusing on those audits that resulted in higher costs examined and lower costs questioned. We evaluated the sample to determine whether the audits complied with Government Auditing Standards and other professional auditing standards.

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