Mitigating Financial Risk: Uncovering $200K in Non-Compliant Billings and Strengthening Subcontractor Management

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Akiri was engaged by a non-profit prime contractor implementing a large time-and-materials federally-funded commercial contract, to conduct an audit of three years of billings for one of its subcontractors, focusing on ensuring timekeeping and associated billings aligned with subcontract terms and U.S. Government Federal Acquisition Regulation (FAR) commercial contract clauses. The audit identified approximately $200,000 in questioned labor billings resulting in large part from the subcontractor's lack of prior federal contracting experience. As a small business navigating the government space for the first time, the subcontractor billed for time spent on activities that did not directly benefit the subcontract, unaware that federal regulations strictly prohibit charging such costs to government-funded efforts.

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While the subcontractor bore clear accountability for failing to engage specialized compliance expertise upon subcontract award, Akiri’s evaluation went far beyond simply flagging line-item disallowances. Demonstrating a holistic approach to audit and advisory engagements, Akiri evaluated the entire operational context by reviewing the executed subcontract agreement alongside the prime contractor’s ongoing management practices. This broader analysis revealed that the prime contractor lacked effective due diligence, subcontract administration, and oversight mechanisms. Had such systems been properly established from the outset, the prime contractor could have identified subcontractor knowledge gaps early and mitigated the risk of these significant disallowances before improper billings occurred.

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This engagement showcases Akiri’s distinct capability to deliver more than just standard task execution. Rather than treating an audit as an isolated exercise, Akiri analyzes how broader business operations, management workflows, and organizational practices intersect to create risk. By diagnosing root operational vulnerabilities on both sides of the relationship, Akiri provided the actionable insight needed to improve cross-organizational governance, strengthen subcontractor oversight, and prevent future financial and regulatory exposure. Ultimately, the case highlights Akiri’s value as a strategic advisor capable of evaluating complex operational ecosystems to protect client interests and drive long-term institutional improvement.