Is a Fixed Price Contract subject to an Audit?
A fixed price contract implies that specific contractual conditions have to be met within a specified time period and that the costs can be no more or less than the agreed upon amount stated in the contract. This type of contract is limited in scope with applicable restrictions. Generally any award may be audited by the sponsor. Sponsors are interested in auditing a fixed price contract for exposure to unallowable, unnecessary or excessive charges. All sponsored projects including fixed price contracts are required to meet the following guidelines: Allowability, Allocability, Reasonableness, Consistency and Timeliness (refer to questions 9). These requirements stand fast and should not be diminished upon a waiver of Audit requirements.
