17600 - Audit Program - DFAS Financial Capability Audit

Master Document Activity Code 17600 DFAS Financial Capability Audit Version 7.0, dated May 2011 B-1 Planning Considerations Purpose and Scope The purpose of the financial capability audit for DFAS Installment Agreements is to determine whether the contractor is capable of repaying the proposed installment amounts. The audit will not be stopped with a financial condition risk assessment, regardless of the results of the risk assessment. These audits are performed at the request of the DCMA Financial Capability Group (FCG) on behalf of Defense Finance and Accounting Services (DFAS). In accordance with DoD Financial Management Regulation, Volume 10, Chapter 18, when a debtor to the U.S. Government can establish sufficient justification, a series of installment payments may be approved by DFAS, which will ensure liquidation of debt within a reasonable time frame. Debts generally occur when the contractor has received an overpayment from DFAS. Contract overpayments can occur because of payment mistakes (e.g., duplicate payments) or because of contract administration adjustments. When contractors anticipate having financial difficulty repaying the debt, the contractor may approach DFAS for a repayment installment plan. Prior to approving the installment agreement, DFAS may request the contracting officer to perform a financial capability audit taking into consideration the proposed installment payments to ensure that the contractor has the ...