PNWC's Government Contracting Update

What is a Profit Margin Test?

in Blog by

Every DCAA (Defense Contract Audit Agency) audit, whether requested or self-initiated, begins with a risk assessment. A risk assessment is a set of tools auditors – all auditors – use to help decide where and what to focus on in an audit. So, for example, if only $100 of material costs have been charged against a $1 million contract, the auditor would probably conclude that his/her limited resources can be better spent on other than material costs.

Source: PNWC’s Government Contracting Update: What is a Profit Margin Test?

Leave a Reply

Latest from Blog

Go to Top