Avoiding Litigation When Auditing Government Contractors

By: Claude M. Millman
The CPA Journal
April 2019 Edition

Government contracting is big business. More than 4 million contractors serve the U.S. government, and they collectively receive more than $500 billion per year. While many people think of those federal contracts when they refer to “government contracts,” states and municipalities also have substantial contracting budgets. For example, New York City (where the author used to serve as chief procurement officer) spends close to $20 billion per year through roughly 40,000 procurement actions.

Of course, government contractors need tax preparation and auditing services. While CPAs can be of great service to such clients, government contracting involves special risks that can affect contractors and the accountants they retain. Before agreeing to audit a government contractor, it is useful to consider these issues, recognize how they may lead to controversies and litigation, and take steps to mitigate the chances that small problems will become big ones.

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