#02
Cost's contract audit is an exam, and means develop sufficient evidence to support a valid opinion about the extent to which contractor incurred costs on carrying out a contract, or estimating costs on his offer, and are contained in his claim for reimbursement or a bid proposal, about whether cost is:
The scope of audit is contractor's accounting nomenclature, chart of accounts, accounting manuals and financial statements. Besides, the auditor's professional opinions and his conclusions on the acceptability of contract costs, must be based on the auditor's knowledge of the contractor's practices on classification, grouping and allocating of costs, and the actual nature of the expenditures charged to the various accounts and classifications. This knowledge is best gained by selective testing of transactions recorded in the various accounts.
The auditor, at all times, should be alert to any matters that may affect the contract's prudent and efficient management. When the auditor becomes aware of the need for improved practices of costs contract, must be advise to contractor for to take measures correctives and, to the maximum extent feasible, those recommended be included in the audit report.
In performing normal procedures of cost's audit, in connection with a contract's examination, auditors should be alert for indicators of excessive prices or unreasonable profits; and by evidence of overcharges or inadequate refund compensation to the contract. If the auditor finds some of them, as also facts or things involving suspected fraud or other similar irregularities and defective pricing, immediately must be communicated to contracting authority.
Cost's contract audit is an exam, and means develop sufficient evidence to support a valid opinion about the extent to which contractor incurred costs on carrying out a contract, or estimating costs on his offer, and are contained in his claim for reimbursement or a bid proposal, about whether cost is:
- reasonable, as to nature and amount,
- allocable and measurable by the application of duly promulgated of cost accounting standards, provisions and contract clausues,
- generally accepted by accounting principles and practices appropriate to the particular circumstances; and
- in accordance with applicable cost's limitations, or exclusions, as stated in the contract or in public procurement rules of European Union.
The scope of audit is contractor's accounting nomenclature, chart of accounts, accounting manuals and financial statements. Besides, the auditor's professional opinions and his conclusions on the acceptability of contract costs, must be based on the auditor's knowledge of the contractor's practices on classification, grouping and allocating of costs, and the actual nature of the expenditures charged to the various accounts and classifications. This knowledge is best gained by selective testing of transactions recorded in the various accounts.
The auditor, at all times, should be alert to any matters that may affect the contract's prudent and efficient management. When the auditor becomes aware of the need for improved practices of costs contract, must be advise to contractor for to take measures correctives and, to the maximum extent feasible, those recommended be included in the audit report.
In performing normal procedures of cost's audit, in connection with a contract's examination, auditors should be alert for indicators of excessive prices or unreasonable profits; and by evidence of overcharges or inadequate refund compensation to the contract. If the auditor finds some of them, as also facts or things involving suspected fraud or other similar irregularities and defective pricing, immediately must be communicated to contracting authority.
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