Reducing the audit risk of government contractors

Risk must be considered by the auditor both in planning the audit, designing the audit procedures and evaluating whether the financial statements taken as a whole are presented fairly, in all material respects, in conformity with GAAP. Businesses who contract with the federal government present thei...

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Bibliographic Details
Published in:The Practical accountant 1995-03, Vol.28 (3), p.47
Main Authors: Jones, Carolyn M, Platau, Steven M
Format: Magazinearticle
Language:English
Subjects:
Accounting
Accounting and auditing
Assistance
Audit risk
Auditing procedures
Auditing profession
Auditing standards
Auditors
Compliance
Conformity
Contract negotiations
Corporate profits
Cost accounting
Costs
Financial statements
Fraud
Government contractors
Government contracts
Internal controls
Practice
Proposals
Purchase orders
Rev. Rul. 65-17
Revenue procedures & rulings
Revenue recognition
Small business
Subcontractors
Tax treaties
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Summary:Risk must be considered by the auditor both in planning the audit, designing the audit procedures and evaluating whether the financial statements taken as a whole are presented fairly, in all material respects, in conformity with GAAP. Businesses who contract with the federal government present their own audit risk. Lengthy regulations, standards and statutes which govern costing of contracts and billings pose significant risks to the contractor who is not familiar with them or chooses to ignore them. When a government contractor submits a proposal, it is based on the costs estimated to be incurred in performance of that contract, and the contractor must certify that the cost or pricing data which supports those estimates are accurate, current and complete at the time agreement in the contract price was reached. The auditor has a responsibility to design the audit to provide a reasonable assurance that misstatements from errors or illegal acts having a material direct effect on related financial statement amounts are detected.
ISSN:0032-6321