One of the ways it ensures that contractors spend money appropriately is through audits. These audits are meant to determine whether contract costs are allowable, allocable and reasonable. Contracting officers are then better able to negotiate prices and settle contracts for services and supplies using DCAA recommendations. The DCAA has no direct role in determining which companies are awarded defense contracts; instead, it provides recommendations to the government officials who first select contractors to perform government-funded work and then negotiate prices accordingly for the products and services offered.
For instance, your accounting system should be able to track costs separately such as direct and indirect costs, accounting costs, billing costs, and labor costs. Ideally it should be fully integrated with your timekeeping system and be able to keep track of all of the reports that DCAA wants to see during an audit.
The DCAA performs a number of types of audits, including forward pricing, special audits, incurred cost, pre-award and other audits. The primary method of tracking where government money goes is by accounting processes, so it is particularly important that contractors perform scrupulous accounting. Here are the three areas where contractors need to be compliant with DCAA standards:. Every contractor is responsible for remaining compliant with all the government rules and regulations that apply.
The consequences of illegal and unethical conduct or noncompliance can include suspension, debarment, voided or terminated contracts, listing in the Excluded Parties List System EPLS and criminal and civil penalties. Enter prior years cumulative incurred cost from prior year schedule I column J to current year schedule I column F if applicable. Complete physically complete and Penalties columns with yes or no. Note: Current year costs for time and material contracts are derived from schedule K, not schedule H.
If any subcontracts were awarded under either cost reimbursable or time and material contracts complete the information requested on schedule J. For each time and materials contract complete schedule K. For each contract list each labor category including hours and billing rate. Link general ledger labor accounts from schedule B, C, D, Fringe, H as may be applicable to the appropriate lines in the general ledger half of the Schedule L.
If applicable, list any decisions or agreements with the contracting officer that impact direct or indirect costs. Should also list any accounting or organizational changes that impact the allocation of costs to contracts. This is the Certification of Indirect Costs. It needs to be signed by an officer for the submission to be considered adequate and auditable.
This is the schedule for contract closing information. If any contracts were physically completed during the year, complete this schedule for each physically completed contract.
Some auditors do request the optional schedules be completed. I do not complete these voluntarily unless compelled by the government. Contractors are free to complete these schedules if preferred. Incurred cost submissions.
Enter company name, location and fiscal year end date. Click the Run Pool Set up. Indirect Cost Pools a. Due to its complex nature, it can be confusing to many government contractors and potentially less experienced accountants. The Defense Contract Audit Agency DCAA is the government agency in charge of auditing and reviewing government contractors to check for violations in their business and accounting processes. The ICE Model is the electronic version of the Model Incurred Cost Proposal and provides contractors with a standard, user-friendly submission package for preparing adequate incurred cost proposals.
These gaps typically fall under the major areas identified in the governments Form The next step is for ReliAscent to provide a quote to the company on how to fix this. Once the conversion method is selected, work can begin. The main tasks encountered in a conversion include:. Sometimes, a small business has a general ledger program already in use when they decide to start accepting work from the Federal Government. Several steps should be reviewed prior to proceeding.
This is a partial list of considerations prior to converting the platform to QuickBooks:. Setting up your QuickBooks is just the first step; once it is brought into compliance, it must remain in compliance and this requires the help of experts.
Unfortunately, government contract, job cost accounting differs substantially from the commercial bookkeeping and accounting that a traditional bookkeeper or CPA is familiar with.
While companies with existing accounting personnel on staff can sometimes be trained to handle the day to day bookkeeping and administrative tasks required, performing the month-end closes, calculating indirect rates, and the necessary financial reporting required, is best left to our staff.
Toggle Mobile Menu. Cost accumulation must be under the general ledger control.
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