Considering the potential financial rewards and stability offered by doing business with the government, it’s not surprising that so many businesses seek to bid on contracts for services and products. As with any potentially lucrative opportunity, there are certain requirements and costs involved – in the case of government contractors, this centers around setting up an appropriate accounting system and ensuring proper segregation of income and costs so that the contractors adhere to DCAA audit standards. When compared to standard accounting procedures, this equates to more sophisticated internal controls, reporting tools and documented processes (accounting policies and procedures that outline what tasks need to be performed and which individuals will perform them).
DCAA (Defense Contract Audit Agency) audits are used to ensure a company’s indirect rate, the amount they can charge the government for their products and/or services, is correct. This rate helps to ensure that all involved parties are fairly valuing what they are providing and receiving and requires careful planning and monitoring.
DCAA audits are generally performed as pre and/or post award. Pre-award audits are utilized to determine if a potential government contractor is set up to manage and report on their costs and accurately determine effective pricing for their products and/or services. Post-award audits occur at the end of a contract’s term to verify that all associated operational expenses are appropriate and that the indirect rate meets all requirements.
As it relates to accounting, the underlying software is ultimately the most effective tool for establishing and maintaining compliance with DCAA mandates. For most small businesses and startups, this is going to mean setting up and customizing a more affordable and generally equipped package such as Quickbooks. For larger organizations and more established contractors, this often involves a specialized government contractor accounting package such as Deltek (or other industry-specific packages that offer the ideals of both categorization and scalability relating to these contracts).
Another key factor for government contractors (again, relating back to DCAA audits) is selecting and implementing the right time and billing solution. Companies need to be able to track individual contractors and employees on a per project, per task basis, and be able to account for different pay and billing rates. Thanks to its ability to configure company information, allow workers to quickly and easily enter granular project-level details and provide appropriate management-level approval controls, Springahead is one of the ideal time and billing solutions on the market today.
Lescault and Walderman has been working with government contractors for years, adapting Quickbooks and working with industry software such as Deltek to ensure companies are properly tracking direct, indirect fringe, overhead and administrative costs, all in an effort to maintain compliance with government requirements.
Ultimately, the challenges associated with a DCAA audit are outweighed by the definitive information they provide related to:
Acceptable System Requirements
Incurred Cost Submissions
Whether you are preparing to bid on a government contract and are faced with a DCAA Pre-Award Audit, need assistance with ongoing DCAA compliance as it relates to your accounting systems and procedures, or validating your rate calculations in a Post-Award Audit, we can help you to organize your financial information and achieve compliance. Contact Lescault and Walderman today at 866-496-2042.