Executive Brief | 2-Minute Read

A recent U.S. Government Accountability Office review found that selected Department of Energy field offices lacked clear definitions and measurable criteria for evaluating contractor assurance systems.

Although the review concerned specific DOE contracts, it offers four practical lessons for CFOs responsible for compliance, risk management and contractor performance.

What CFOs should evaluate

1. Define effectiveness

Document what an effective assurance or internal-control system must accomplish. Avoid relying on broad conclusions such as “controls are operating effectively” without supporting criteria.

2. Establish measurable indicators

Use defined measures such as recurring deficiencies, overdue corrective actions, compliance exceptions and the reliability of contractor-generated information.

3. Strengthen corrective-action controls

Each finding should identify its root cause, responsible owner, completion date and required evidence. Remediation should be validated before an issue is closed.

4. Align oversight with risk

Direct greater review effort toward activities with significant financial, compliance, operational or reputational exposure.

Recommended CFO action

Ask management to provide:

• The criteria used to evaluate control effectiveness
• A current register of unresolved and recurring findings
• Evidence supporting closed corrective actions
• A risk-based oversight and review schedule

Clear criteria and disciplined follow-up help management determine whether an assurance system is producing reliable information—not merely completing required procedures.

Further reading: GAO-26-107850: DOE Contracting—Risk-Informed Oversight and Clearer Expectations for Assurance Systems

This article presents general professional considerations and does not constitute legal, regulatory or contracting advice.