GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND PRACTICES IN RELATION TO DEFENSE CONTRACTS.
Abstract Accounting and auditing personnel of the U.S. Department of Defense constantly receive suggestions from accountants, from its contractors and their trade association representatives and from procurement personnel within the Department that its contracts should only place an obligation on its contractors to maintain an accounting system in accordance with generally accepted accounting principles and practices. The purpose of this article is to consider these suggestions and to indicate the accounting and auditing problems facing the Department of Defense in connection with its procurement contracts. Cost-type contracts require most contract costs be readily ascertainable. Generally accepted accounting principles provide standards for the evaluation of the financial position of an enterprise and for the measurement of income and expense over a given period of time. Fixed price contracts may also incorporate an incentive feature. Under this type of contract a unit target price is agreed upon during the initial negotiations with the contractor. The usual annual audit by independent auditors is directed toward the determination of the reliability of management's representations contained in the client's financial statements. The major audit effort is placed on balance sheet items with somewhat less emphasis on income and expense accounts.
- DOI
- 10.2308/tar-7087966
- Volume
- 28 (3)
- Pages
- 385-391
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref