Government Procurement Certification Audit & Accountability 3 — Questions and Answers
Question 1: Which Federal Acquisition Regulation (FAR) clause requires contractors to maintain adequate cost accounting standards compliance?
- FAR 52.215-2
- FAR 52.230-2 (Correct answer)
- FAR 52.222-26
- FAR 52.244-6
Correct answer: FAR 52.230-2
FAR 52.230-2 requires contractors subject to CAS to comply with all applicable cost accounting standards.
Question 2: A contractor charges costs for a company picnic to a government contract. This is an example of what type of unallowable cost?
- Direct unallowable cost
- Directly associated unallowable cost
- Entertainment cost (Correct answer)
- Expressly unallowable cost
Correct answer: Entertainment cost
Entertainment costs, including company picnics, are expressly unallowable under FAR 31.205-14 and cannot be charged to government contracts.
Question 3: What is the purpose of a 'closeout audit' in government contracting?
- To audit a contractor before they close their business
- To reconcile all incurred costs and ensure final payment accuracy before contract closeout (Correct answer)
- To evaluate contractor performance for future awards
- To assess environmental compliance at contractor facilities
Correct answer: To reconcile all incurred costs and ensure final payment accuracy before contract closeout
A closeout audit reconciles final costs, verifies allowability, and ensures the government pays only what is owed before the contract is officially closed.
Question 4: Under FAR 15.403, cost or pricing data is NOT required when the acquisition is for:
- Contracts over $2 million
- Commercial items or when adequate price competition exists (Correct answer)
- Cost-reimbursement contracts
- Contracts with educational institutions
Correct answer: Commercial items or when adequate price competition exists
FAR 15.403-1 exempts commercial items and acquisitions with adequate price competition from the requirement to submit certified cost or pricing data.
Question 5: What is a 'billing rate' versus a 'final indirect cost rate' in contractor accounting?
- Billing rates are final; final rates are estimates
- Billing rates are provisional rates used during contract performance; final rates are established after year-end audit (Correct answer)
- They are identical terms used interchangeably
- Billing rates apply to materials; final rates apply to labor
Correct answer: Billing rates are provisional rates used during contract performance; final rates are established after year-end audit
Billing rates are provisional rates allowing interim payments; final rates are established after the fiscal year ends and incurred cost audits are completed.
Question 6: Which of the following best describes the 'audit cognizance' concept in federal contracting?
- A contractor's right to dispute audit findings
- The assignment of audit responsibility to a specific audit agency for a contractor (Correct answer)
- The government's authority to demand access to contractor records
- A contractor's self-certification of compliance
Correct answer: The assignment of audit responsibility to a specific audit agency for a contractor
Audit cognizance refers to the designation of which audit agency (e.g., DCAA, OIG) has primary responsibility for auditing a specific contractor.
Question 7: A contracting officer receives a DCAA audit report questioning $500,000 in costs. What is the CO's responsibility?
- Automatically disallow all questioned costs
- Review the audit findings and make an independent determination on allowability (Correct answer)
- Forward the report to DOJ for prosecution
- Accept the audit findings without review
Correct answer: Review the audit findings and make an independent determination on allowability
The contracting officer must independently review DCAA's findings and make a final decision on cost allowability, as the CO—not the auditor—has authority to disallow costs.
Government Procurement Certification Audit & Accountability 3
Which Federal Acquisition Regulation (FAR) clause requires contractors to maintain adequate cost accounting standards compliance?