17100 - Audit Program - Termination Fixed Total Cost Basis

Master Document – Master Document Activity Code 17100 Termination, Total Cost Basis Version 4.8, dated December 2010 B-1 Planning Considerations Purpose and Scope 1. This program is intended to provide a logical sequence to the audit effort and to reflect a mutual understanding between the auditor and the supervisor as to the scope required to meet auditing standards and DCAA objectives for the current assignment. The audit steps in the program are intended as general guidance and should be modified as considered necessary to fit the current audit. 2. The objective of the termination audit is to develop information and documentation to serve as a basis for reporting to the Termination Contracting Officer (TCO) the allowable costs, settlement expenses, and profit and/or loss under the terminated contract, based on the contractor's proposal and supporting records. Applicable Government acquisition regulations will be used as criteria against which the contractor's proposal will be measured. 3. The contractor must obtain TCO approval in advance (FAR 49.206-2) to propose a settlement on the total cost basis (TCB) unless it is a construction contract or a lump sum professional services contract that is completely terminated (FAR 49.206-2b(4)). After reviewing the contractor's records, promptly notify the TCO if the auditor determines that the inventory basis method, rather than the total cost basis method, should be used. The proposal should ...