17100 - Audit Program - Termination of Cost Contracts

Master Document – Audit Program Activity Code 17100 Termination, Cost Contracts Version 4.7, 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. Audit procedures for reviewing costs proposed on a terminated cost-type contract are essentially the same as those established for a normal incurred cost audit. The settlement expense allowance, however, requires action to assure proper adjustment for indirect type expenses proposed as a direct cost of the termination settlement. A full termination usually requires two audit reports: one addressing the final settlement proposal and the other a Contract ...