CLIENT: BLUE SKY INNOVATIVE SOLUTIONS

Country:  USA

Sector:  Other

Service:  Financial Management/Management Consulting

Project:  Pre-Award Survey

Project Description: Blue Sky Innovative Solutions contracted with IBS to assist it perform a Pre-award Survey (SF 1408) of its accounting system to support an upcoming Government proposal requirement. The objective of the survey is to obtain an understanding of the accounting system and test the design effectiveness in meeting SF 1408 requirements as required by the Government, for the purpose of determining acceptability for award of a prospective Government contract.  Specifically, the objectives of the Pre-Award Survey were to determine whether:

• the accounting system (the system) is designed to be in accordance with Generally Accepted Accounting Principles, 
• the system is designed to preclude direct charging of indirect expenses and indirect charging of direct contract costs, 
• the system is designed to produce a subsidiary job cost ledger that accumulates costs by contract at a level of detail consistent with that used by Blue Sky in its proposal, 
• the system is designed to accumulate indirect costs in logical groupings; if the groupings are allocated based on benefits accrued to intermediate and final cost objectives; and if the cost accounting system is documented with a written description of the contents of bases and pools,
• the system is designed to allow the job cost ledger, or its equivalent, to be reconciled and routinely posted to the general ledger control accounts (e.g. totals for direct labor, direct material, subcontracts, other direct costs),
• the system is designed to allow labor charging to intermediate and final cost objectives based on timekeeping documents (paper or electronic timecards) and verify that Blue Sky has policies, procedures or instructions that require timesheets be completed and certified by the employees and approved by the employees’ supervisors.

Our agreed-upon procedures engagement was conducted in accordance with standards established by the American Institute of Certified Public Accountants and Government Auditing Standards, except for presenting the written views of responsible officials, and the requirements of the engagement letter.  The sufficiency of these procedures is solely the responsibility of the specified users of the report.  Consequently, we make no representation regarding the sufficiency of the procedures, either for the purpose for which the report has been requested of for any other purpose.

Generally, the procedures consisted of review and assessment of the organization’s legal structure, financial management and internal control systems, procurement systems, human resources systems, project performance management and organizational sustainability.  The specific procedures included:  (1) reviewing of organizational documents provided for each component of the pre-survey, (2) reviewing existing audit reports (internal/external) and note findings and their resolution, (3) interviewing key organization personnel and document the internal control procedures over the financial management and administration, noting whether there is proper segregation of duties, and (4) performing a walk-through of financial management and administration functions to assess adequacy, perform a walk-through of selected transactions from initiation to completion and review supporting documentation for propriety.