This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.

July 10, 2001

MEMORANDUM FOR DAVID A. GRANT

FROM: Pamela J. Gardiner /s/ Pamela J. Gardiner

SUBJECT: Incurred Cost Audit - Fiscal Year 1998

The Defense Contract Audit Agency (DCAA) audited the contractor's September 30, 1998 certified final indirect cost rate proposal and related books and records for reimbursement of Fiscal Year (FY) 1998 incurred costs. The purpose of the audit was to determine allowability of direct costs and indirect costs rates and to establish audit-determined indirect cost rates for March 29, 1997 through April 3, 1998.

The DCAA considered the contractor's accounting system adequate for the accumulation, segregation, and recording of costs incurred. However, DCAA qualified its audit report because the results of assist audits for subcontractors had not been received. Additionally, DCAA noted that the contractor’s labor system was inadequate in part. In summary, DCAA made upward adjustments of $266,346 to the G&A pool and $5,386 to the Technical Publications Overhead base.

The information in this report should not be used for purposes other than that intended without prior consultation with the Treasury Inspector General for Tax Administration regarding its applicability.

If you have any questions, please contact me at (202) 622-6510 or Maurice S. Moody, Assistant Inspector General for Audit (Headquarters Operations and Exempt Organizations Programs), at (202) 622-8500.

Attachment

The Office of Inspector General for Tax Administration has no objection to the release of this report, at the discretion of the contracting officer, to duly authorized representatives of the contractor.

The contractor information contained in this report is proprietary information. The restrictions of 18 USC 1905 must be followed in releasing any information to the public.

This report may not be released without the approval of this office, except to an agency requesting the report for use in negotiating or administering a contract with the contractor.