Revisions in the Audits of Federal Government Contractors

By Esernio, Robert A., Jr.; Dyson, Robert A. et al. | The CPA Journal, February 1992 | Go to article overview

Revisions in the Audits of Federal Government Contractors


Esernio, Robert A., Jr., Dyson, Robert A., Coorssen, Harriet, The CPA Journal


The rules and regulations applying to government contracts seem like a giant maze to the newcomer to this work. The new AICPA guide captures the essence of the required knowledge needed a CPA in this work and provides references to more detailed instructions.

In 1990, the AICPA issued an audit and accounting guide, Audits of Federal Government Contractors. The guide replaced the industry audit guide, Audits Of Government Contractors, which was originally issued in 1975 and subsequently enhanced in 1981 by SOP 81-1, "Accounting for Performance of Construction-Type and Certain Production-Type Contracts." The guide applies to audits of financial statements of entities providing goods and services to the federal government or their subcontractors. It reflects changes resulting from the accounting and auditing pronouncements and federal statutes and regulations issued since 1975.

The objectives of the guide are to provide both a general background of the federal government contracts environment and practical guidance regarding accounting, auditing, and financial reporting for federal contractors. It describes relevant federal regulations and associated business and operating risks and describes the prevalent practices in applying professional accounting and auditing pronouncements and SEC regulations to government contractors. And if more information is needed, the guide contains an annotated bibliography of selected books, periodicals, and manuals useful in obtaining additional understanding of government contracting, keeping abreast of current developments, and researching specific issues.

The federal contract sector has become more complex with the passage of new laws and regulations. The guide reflects that growing complexity by providing a more complete description of Federal Acquisitions Regulations (FAR) that include FAR supplements, Cost Accounting Standards Board pronouncements (CAS), cost principles, definitions of cost allowability, changes in cost accounting practices, and cost estimation. In addition, the guide discusses supplemental acquisition regulations issued by various government agencies and circulars issued by the Office of Management and Budget which supplement and implement FAR. Finally, the guide describes defective pricing, contract claims, terminations, and suspension and debarment. The guide, however, presents only a general description of these matters and practitioners and industry accountants are advised to refer directly to FAR and other publications listed in the guide's bibliography in order to keep current or to research specific situations.

USING THE GUIDE

The guide is a mini-course in contracting with the federal government. It explains what it means to do business with one of the world's largest purchasers of goods and services. The guide alerts the CPA to the unique circumstances present when a business entity decides to contract with a sovereign power that "conducts its procurement activities under specific laws and implementing regulations."

Chapter 1, "Contract Procurement Process," provides general background on how the federal government contracts for goods and services. Some it buys the shelf, just as many other customers. Frequently, however, the federal government will be the only purchaser and there will be no market to establish prices or foster competition. Accordingly, the federal government must introduce procedures to insure quality at a reasonable price. The auditor must understand these procedures.

Chapter 2, "Federal Acquisition Legislation and Regulations," provides the background for the auditor to understand the laws and regulations that must be considered in designing the audit of a federal contractor. It explains the role of FARs and the cost principles that must followed in accounting for federal government contracts. The auditor is made aware of the fact that there are differences between GAAP and FAR and CAS requirements. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Revisions in the Audits of Federal Government Contractors
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.