Proposed Business System Rule Withdrawn

 Mark Burroughs is a partner at Dixon Hughes Goodman . He has over 20 years of experience in providing auditing and consulting services to government contractors.

With little fanfare, the DAR Council has withdrawn the Proposed Business System Rule (79 FR 41172, July 15, 2014).  The proposed rule would have required that contractors subject to the business system rule to incur costs to perform annual self-evaluations of their Accounting, Estimating and Material Management Accounting Systems (MMAS).  In addition, for DOD contractors with contracts awarded based on certified cost or pricing data totaling $50 million or more, the additional cost of a triennial “CPA Audit” of 3 separate business systems would be required.  On top of the proposed requirements the rule would have provided DCAA with broad access to documents supporting the internal assessments as well as to the workpapers supporting the CPA Audit.

In the public meeting and through formal comments, the proposed rule received less than positive feedback from industry and the accounting profession.

So now the DAR council has withdrawn the rule; however, let’s not declare it dead.  Rumor has it that DCAA has been tasked with reviewing and rewriting the rule.

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