Pharmaceutical contractor manages government compliance without internal expertise

Our client’s need

Baker Tilly was engaged by a publicly traded pharmaceutical contractor to augment its internal resources after it won a significant cost-reimbursable contract supporting the Department of Health and Human Services (DHHS).  The contractor needed help strengthening its internal controls related to government contract cost accounting and invoicing. Additionally, the contractor needed assistance with its annual cost reporting requirements and periodic government audits of incurred costs.

Baker Tilly solution

Baker Tilly’s advisors identified internal control weaknesses related to the contractor’s invoicing process and recommended efficiency enhancements.  The Baker Tilly team also helped the contractor to develop and implement a compliant cost accounting structure, including mechanisms to segregate indirect and direct costs, as well as allowable and unallowable costs.  The team prepared the contractor for its first accounting system audit and continues to prepare the contractor’s annual Incurred Cost Proposals.  Baker Tilly also developed an indirect cost rate modelling tool, which allows the contractor to monitor its rates and adjust provisional billing rates throughout the year.

Results achieved

With Baker Tilly’s help, the contractor successfully passed its accounting system audit.  Management’s invoicing process enhancements have allowed the contractor to timely recover allowable costs and reduce the duration of the Government’s invoice review.  The contractor continues to leverage Baker Tilly for compliance advice and expertise, which most recently helped the company overcome an audit challenge to the appropriateness of its general and administrative cost allocation base.  One of the contractor’s senior leaders stated, “The Baker Tilly team has been an invaluable resource in helping maintain our government contracting/reporting requirements.”

For more information on this topic, or to learn how Baker Tilly government contractor specialists can help, contact our team.