The complexity of government contracts requires the experience of professionals who work with them every day. That’s what we do at CPAGovCon.com – helping clients prepare their accounting and operational systems, along with policies and procedures, to meet the exacting standards set by the Federal Acquisition Regulations (FAR), the Cost Accounting Standards (CAS), as overseen by the Defense Contract Audit Agency (DCAA), and the Defense Contract Management Agency (DCMA).
These requirements demand carefully chosen and configured contractor accounting software for bookkeeping, timekeeping, purchasing, and estimating. We’re experts in DCAA compliant accounting and with most contractor accounting software programs, so we can assess your current needs and bring your systems into DCAA compliance with as little software expense as possible.
You can rely on us to assess where you are and what you need to get ready for government contracts and DCAA audits.
DCAA Adequate Accounting System Review (SF1408) – Before a contractor is awarded any Cost Type contract by the federal government, a ‘pre-award’ audit is required to determine if the contractor’s accounting system can adequately account for costs associated with the contract. The requirements are quite specific, and it’s important to be prepared when the DCAA auditor arrives to perform the review. We assess compliance with the requirements in advance of contract award, and most clients that are new to the area of government contracts benefit greatly from one of these reviews. We identify all the areas that are deficient and those that meet the requirements set by the DCAA for government contractors. We help clients make changes as needed to correct deficiencies, and meet with the auditor on site during the review. For more information on this service, please give us a call for a free consultation.
Financial Capability Review – Government contractors typically are subject to a Financial Capability Analysis prior to contract award. During this review, the government (through DCMA) is ensuring your firm is financially sound and can carry out the terms of the contract. The assessment will include reviewing your projected cash flows, sales and profits, as well as your balance sheet, income statement, compensation, affiliate companies, tax returns, and financing and debt arrangements, along with other criteria. Most contractors will benefit from an upfront review of their financial status, so they can be ready for this review. It’s frequently the case that a large contract award will not be supported by current financial information. We can help put measures in place to demonstrate the financial soundness of your organization, and your ability to meet the financial requirements and demands of a contract award. We can conduct this review before clients are contacted by DCMA to provide peace of mind for what the DCMA wants to know, and to identify any questionable areas that need to be addressed. If DCMA has already contacted you, we can help prepare your response and assemble your submission package to address DCMA’s concerns.
DCMA Compliance – In some cases the DCMA rules differ from DCAA expectations. They can even conflict with each other. In our role as government contract consultants, we can help you sort out what needs to be done to satisfy each agency with our years of experience consulting for government contractors just like you.
Business Systems Compliance – Possibly the most frequently asked questions related to DCAA (Defense Contract Audit Agency) compliance have to do with contractor accounting software and related installation and support services. Our clients appreciate our depth of experience and ability to assess just what they need to bring their systems into compliance for winning and managing government contracts. We work with clients to identify the best fitting accounting system for current requirements and future growth. Not only does the accounting system need to be compliant, but so do systems for timekeeping, purchasing and estimating. We assist our clients by managing the implementation project, identifying qualified partners to install and support systems, and providing staff augmentation, as needed. For more details on these services, see the page covering our Software System Consulting.
Cost Accounting Standards (CAS) Compliance Assessment – Government contractors are required to follow a set of accounting standards known as the CAS. Some contractors are subject to modified CAS coverage and must follow just four such standards, while others need to observe all 19 of them. Once subject to CAS coverage, contractors communicate cost accounting policies to the contracting agency in a Disclosure Statement. Because the Disclosure Statement becomes the basis of future audits by DCAA, this is a critically important document. We suggest clients prepare and follow a Disclosure Statement significantly prior to being subject to CAS coverage, in order to clarify their internal policies. This is important because once submitted to DCAA, Disclosure Statements cannot easily be changed without submitting an amendment stating why the change is proposed as well as disclosing the Cost Impact of the change.
Sometimes accounting for a new contract can run afoul of an existing Disclosure Statement, or even create noncompliance with CAS standards, when the same type of costs is now being accounted for differently than in earlier contracts. We can conduct a compliance assessment of your first or subsequent contracts to be sure you are booking costs properly and to define your standards in a Disclosure Statement using the correct format.
Federal Acquisition Regulations (FAR) Compliance Assessment – The FAR governs the federal government’s purchasing process, and ensures the purchasing process is both consistent and fair. The rules outlined in the FAR govern how you account for incurred costs, how you will bill the government, how you will be paid, as well as the audit requirements associated with your contract. Let us help you by clarifying these regulations for you, implementing them within your accounting system, and making sure you are compliant with the federal contract for which you are bidding.
Policy and Procedure Development and Compliance Review – A contractor’s accounting and business systems include all of the policies, procedures and processes that support your accounting operations. These policies and procedures need to be documented, consistent with your disclosure statement, and implemented in a way that’s auditable by DCAA. If you currently have policies and procedures in place, we are available to review these for you, and ensure they are compliant and consistent with your contracts and disclosure statement. If you don’t currently have policies and procedures in place, we can help you develop a full set of policies to support your accounting and business systems.
Process Improvement and Optimization – Every government contractor wants to operate as efficiently as possible, to give them an edge over competitors when estimating and bidding on a new contract, as well as during the management of contracts won. We are knowledgeable about many different techniques that contractors can employ to improve their processes and optimize their costs and operations. Let us help you make your business run more efficiently with suggestions we can offer after a few hours of review and consultation.
Entity Standup and Optimization – As government contractors mature and enter into Joint Venture and subcontract relationships, decisions need to be made about how best to set up these entities, and how best to manage the intercompany transactions between Joint Venture entities and your primary business entity. Let us help you navigate these decisions and the related accounting efforts.
Audit Readiness, Representation and Support – Audits are a fact of life for government contractors. You will be interfacing with a number of oversight agencies, including the DCAA and DCMA, as well as the contracting agency itself, and you’ll be responding to questions related to your proposal, your indirect rates, billings, incurred cost submissions and contract closeouts. Each of these interactions contain audit risk. We can help you navigate these risks by establishing a compliant accounting system, policies, procedures and related systems for success. We have more than 40 years of combined experience on both sides of the desk – having performed dozens of audits for the DCAA, as well as represented dozens of government contractors when they are being audited. Let us make sure you are prepared for any audit that may come your way. Here are three services we perform to check your readiness and to help relieve the stress of any DCAA or DCMA audit that may occur:
Outsourced Internal Audit
Test Audit to Determine Contracting Readiness
Representation for DCAA and DCMA Audits
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Please contact us to learn more about how we might help you with your accounting or tax servicing needs.