**GAO-10-163T**                      Published: Oct 15, 2009. Publicly Released: Oct 15, 2009.                  

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## Highlights

In fiscal year 2008, the Department of Defense (DOD) obligated over $380 billion to federal contractors, more than doubling the amount it obligated in fiscal year 2002. With hundreds of billions of taxpayer dollars at stake, the government needs strong controls to provide reasonable assurance that contract funds are not being lost to fraud, waste, abuse, and mismanagement. The Defense Contract Audit Agency (DCAA) is charged with a critical role in contractor oversight by providing auditing, accounting, and financial advisory services in connection with DOD and other federal agency contracts and subcontracts. However, last year GAO found numerous problems with DCAA audit quality at three locations in California, including the failure to meet professional auditing standards. In a follow-up audit issued this September, GAO found that these problems existed agencywide. Today's testimony describes widespread audit quality problems at DCAA and provides information about continuing contract management challenges at DOD, which underscore the importance of DCAA audits that meet professional standards. It also discusses some of the corrective actions taken by DCAA and DOD and key GAO recommendations to improve DCAA audit quality. In preparing this testimony, GAO drew from issued reports and testimonies. These products contained statements regarding the scope and methodology GAO used.

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## Topics

National Defense

AccountabilityAudit oversightAudit reportsAuditing proceduresAuditing standardsAuditsContract administrationContract oversightContractor paymentsContractor violationsDefense auditsDefense procurementDepartment of Defense contractorsInternal auditsInternal controlsQuality assuranceRisk assessmentTaxpayersWeapons systemsWaste, fraud, and abuse