Auditable Dollar Value

Auditable Dollar Value (ADV)

Represents the total dollars incurred for a contractor fiscal year for its flexibly priced contracts. It is an important number, in that, that number can dictate whether a contractor is a major or non-major contractor, and whether the ADV is so low that audit and oversite is limited due to the lack of risk.

A major is a contractor with over $100M in annual sales, whereas, a non-major is one that has less than $100K in sales. The number increases periodically, and before $100M, the number was $90M.

Additionally, the DCAA uses another threshold for audit which is $15M. Audit and oversight procedures under $15M are normally limited, and a contractor is initially placed on a low-risk assessment, unless the auditor has determined that there is a reason to raise the level of risk. Risk is normally raised by previous findings, system deficiencies, or other audit leads.

Contractors with more than $15M, but less than $100M are often assessed control risk at maximum (high) because it is more efficeint to perform substantive tests for significant and sensitive accounts than to test the effectiveness of the contractors internal controls (DCAM 5-111.2a)

Reference

• Defense Contract Audit Manaul (DCAM)- Chapter 5
• DCAA Internal Control Questionaire