12030 - Other Audit Guidance - Internal Control Matrix

4 pages

English

12030 - Other Audit Guidance - Internal Control Matrix

Thuwyug - Defense Contract Audit Agency

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4 pages

English

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INTERNAL CONTROL MATRIX FOR AUDIT OF PURCHASING CONTROLS Version No. 4.2 October 2006 Control Objectives Example Control Activities Audit Procedures 1. CONTRACTOR COMPLIANCE, TRAINING, POLICIES, AND PROCEDURES The contractor performs internal audits or The contractor performs internal audits or a. Determine whether any internal audits or management reviews, conducts training, and management reviews of the purchasing management reviews of the Purchasing has policies and procedures for the purchasing department to be sure that: Department have been performed. Evaluate the department to ensure the integrity of the results and note any deficiencies. • Employees are qualified. purchasing system. • Training is conducted. b. Determine if any required follow-up actions • Policies and procedures exist and are followed. were taken related to reported findings or recommendations, or why no actions were taken. c. Adjust the scope of audit based on the results of the internal audits or management reviews. The contractor has written procedures that d. Obtain the contractor’s purchasing policies and encompass the purchasing operation. procedures. Verify that they include the items set forth in control objectives 2 through 6 below. The contractor has a program for education and e. Obtain a list of training provided to purchasing training of the purchasing personnel. personnel. Evaluate the training materials to verify that the training covers Government ...

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Publié par	Thuwyug
Nombre de lectures	64
Langue	English

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Version No. 4.2

Control Objectives 1. CONTRACTOR COMPLIANCE, TRAINING, POLICIES, AND PROCEDURES The contractor performs internal audits or management reviews, conducts training, and has policies and procedures for the purchasing department to ensure the integrity of the purchasing system.

2. PURCHASE ORDERS AND SUBCONTRACT CLAUSES Purchase Orders and subcontracts should contain all flow down clauses, including those terms and conditions required by the prime contract, as

INTERNAL CONTROL MATRIX FOR AUDIT OF PURCHASING CONTROLS

Example Control Activities

The contractor performs internal audits or management reviews of the purchasing department to be sure that: •Employees are qualified. •Training is conducted. •Policies and procedures exist and are followed.

The contractor has written procedures that encompass the purchasing operation.

The contractor has a program for education and training of the purchasing personnel.

The contractor flows down to subcontracts the applicable clauses required by the prime contract.

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Audit Procedures

October 2006

a. Determinewhether any internal audits or management reviews of the Purchasing Department have been performed.Evaluate the results and note any deficiencies.

b. Determineif any required follow-up actions were taken related to reported findings or recommendations, or why no actions were taken.

c. Adjustthe scope of audit based on the results of the internal audits or management reviews. d. Obtainthe contractor’s purchasing policies and procedures. Verifythat they include the items set forth in control objectives 2 through 6 below.

e. Obtaina list of training provided to purchasing personnel. Evaluatethe training materials to verify that the training covers Government purchasing regulations and contractor procedures.

Verify that the contractor ensures flow down of applicable prime contract terms and conditions in purchase orders and subcontracts (e.g., either

Control Objectives well as any clauses needed to carry out the requirements of the prime contract.

3. MANAGEMENT OF PURCHASING The contractor should organize and administer the purchasing department to ensure the effective and efficient procurement of required quality materials and parts at the most economical cost from responsible/reliable sources.

Example Control Activities

The purchasing files should contain appropriate information to support the vendor selected and the price paid.

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Audit Procedures the Government or contractor has access to the subcontractor’s/intercompany books and records for audit, that billings include only allowable costs) [see CAM 6-802.2c.]).

a. Determinewhether the purchasing department is organizationally independent in order to allow it to operate at maximum effectiveness and make objective decisions.

b. Verifythat the contractor requires the following purchasing file data to be maintained: •The purchase order •The purchase requisition •The request for quotation (RFQ) •Copies of the vendors’ quotes •A bid tabulation sheet that summarizes and compares vendor quotations •Certificates for the rent-free use of Government facilities •Vendor surveys or facilities capability reports •Source selection explanation •Price or cost analysis data •Negotiation summary •Basis for selection of contract type •Copies of technical data •Price redetermination or termination data •Correspondence between the purchasing department and the bidders •Evidence of Small and Disadvantaged Business enterprise consideration

Control Objectives

4. SELECTING SOURCES The contractor should select the most responsive and responsible sources for furnishing required quality parts and materials and promoting competitive sourcing among dependable suppliers to obtain the most reasonable prices from sources that meet contractor quality requirements.

5. PRICING AND NEGOTIATION The contractor ensures that some form of price or cost analysis is performed in connection with every purchasing action.

Example Control Activities

In accordance with FAR, a make-or-buy program is to be established.

The contractor has a system to inform management of its performance.

Purchasing promotes competitive sourcing to the maximum extent possible.

The contractor has a vendor performance rating system that evaluates price, quality, and delivery performance. Written justification is provided for single/sole source purchasing and split awards.

The contractor performs cost/price analysis and technical evaluation of its subcontractor’s and supplier’s proposals/quotations.

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Audit Procedures •Information concerning the use of special terms and conditions and approval thereof •Departmental and management approvals, if required •Administrative Contracting Officer notification and consent •Certificate of Current Cost or Pricing Data, if procurement meets the requirements c. Verifythat the contractor follows its make-or-buy program.Ensure that procedures are followed and decisions are documented. d. Verifythat the contractor has a system of reports and controls that reflect performance and provides the means through which the purchasing department reports its performance to company management.

a. Evaluatethe following as indication of the contractor’s commitment to promote competition: •Reports to top management •Existence and usefulness of the historical records on parts and vendors •Extent of market survey efforts b. Verifythe implementation of a current vendor performance rating system.

c. Selectivelytest procurement files to ensure compliance with FAR requirements related to competition.

a. Determineif the purchasing file contains appropriate cost/price analysis and technical evaluation (see step 3.b.).

Control ObjectivesExample Control ActivitiesAudit Procedures There is a system in place for seeking and takingb. Verifythat the contractor has a system to advantage of purchase discounts.negotiate and take advantage of quantity and prompt payment discounts.Selectively evaluate payments to determine that the system is working. c.Verify that guidelines are in place and being followed for determining that cost effective methods are used for processing the high volume of low dollar value orders and calls against blanket orders and open ended subcontracts. Includeconsideration of corporate wide purchase agreements, where appropriate. 6. SUBCONTRACT AWARD AND ADMINISTRATION The contractor ensures that proper types ofContractor has guidelines for what types ofa. Verifythat guidelines are in place and being subcontracts are selected and that there aresubcontracts are awarded and under whatfollowed for determining the types of controls, including oversight and surveillance, ofcircumstances. subcontractsawarded and under what subcontracted effort.circumstances. b.Determine that the contractor notifies the Government upon award of an auditable subcontract or intercompany order (see CAM 6-802.2b.). c.Verify that the contractor obtains annual incurred cost proposals for auditable subcontracts/intercompany orders, assures the proposals are audited, and incorporates the audit results into billings and proposals to the Government. d. Determinethat the contractor adequately monitors financial and technical performance.

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