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NCJRS Abstract

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NCJ Number: 70300 Find in a Library
Title: Internal Audit of Military Research and Development Procurement
Journal: US Army Audit Agency Bulletin  Dated:(March 1965)  Pages:27-34
Author(s): W B Cruitt
Date Published: 1965
Page Count: 8
Format: Article
Language: English
Country: United States of America
Annotation: Discussion covers the auditor's role in the review of military research and development (R&D) procurement awards to civilian sector contractors, awards which represent the largest share of Government and military R&D expenses.
Abstract: The auditor's role is to provide accounting counsel on financial and operating matters, and through the function of internal audit, provide recommendations leading to improvements in operations, organizations, systems, procedures, and controls. A primary objective of internal audit in the area of procurement is to appraise the effectiveness of the procurement mission. In evaluating the overall efficacy of Government cost-estimating procedures, the auditor should determine where Government cost estimates were carefully and independently prepared and effectively utilized in performing cost and price analysis of contractor proposals and in negotiations with contractors. Auditors should determine if the estimates were prepared under Armed Services Procurement Regulation (ASPR) concepts and thus represented a plan of action, with properly established management controls, necessary to accomplish the R&D objective. They must also decide whether Government Furnished Property and the level of Government inhouse effort required were estimated. Differences between Government estimates and contractor estimates must be reconciled and all contract requirements must be specified completely and unambiguously so as to avert future contractor problems. The quality of technical 'brain power' must be assessed, together with contractor provisions for maintaining certain levels of technical capability. Auditors must focus attention on the selection of contractors and the type of procurement contract (whether it be the cost-plusfixed-fee contract or the Two-Step Formal Advertising procedure), and on the cost and price analysis and negotiations that the contractors propose; e.g., whether sufficient cost data was requested and received from contractors' sources, or whether the procurement team concept was effectively used by the contractors in performing price and cost analysis. The audit program must, furthermore, be tailored to an assessment of the effectiveness and quality of the contracting office's monitorship of the contractual effort in progress. Three references are provided. For related documents, see NCJ 70301 - 70305.
Index Term(s): Accounting methods; Audits
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