General Audit Policy for Compensation System Review(s) (CSR)

a. Refer to 5-103 for general audit policy for the audit of contractor accounting and management systems and related internal controls.

b. It is DCAA's policy that Compensation System Reviews (CSRs) need only be routinely planned and performed for major contractors. However, if the field audit office has sufficiently documented that the compensation system for a particular nonmajor contractor presents a significant audit risk, then a CSR should be planned and performed for that contractor. Audits at major contractors may be modified if past experience has been favorable and current audit risk is considered to be low. This determination of low risk must be fully documented in the planning documents supporting the program plan. If audit risk is considered to be high, CSRs should be performed more frequently. Most compensation audits will be performed as separate assignments; however, at smaller contractor locations, selected compensation audit steps may be added to existing incurred cost or forward pricing audit programs.