It is a real learning experience for small businesses trying to get into government contracting. One hard part of that process is dealing with Federal procurement officials and undergoing DCAA or other Federal agency audits. It requires in-depth knowledge of the Federal requirements and the tactical applications to implement the accounting and business processes needed to comply with the Federal Acquisition Regulation (FAR) or Cost Accounting Standards (CAS).
Job cost accounting that is compliant with FAR or CAS affects your estimating system, your general ledger, the indirect cost structure, such as overheads or general and administrative expense , and forecasting indirect budgets and rates. You are required to segregate your government contract direct costs separately from your commercial work. FAR and CAS require that expressly unallowable costs are not charged directly or indirectly to government contracts.
You will be subjected to periodic audits to review your accounting system and records and confirm that unallowable cost are excluded from your cost estimates for and billings to government contracts. DCAA and other Federal audit agencies do not "approve" any cost accounting software, but do approve contractors' job cost accounting practices used to comply with FAR or CAS.
DCAA may perform audits on cost proposals at the request of the Procurement Contracting Officer (PCO). The DCAA will audit your indirect rates against your budget forecasts, your labor category pricing, vendor quotes, contingent hire agreements, subcontractor proposals and all the other data that is relevant to the cost volumes of the proposals. DCAA may also be requested to complete a pre-award survey of your accounting system using the criteria on Standard Form 1408. After award of a contract DCAA will provide contract audit services based upon the type and amount of award made. The most burdensome (from a contractor's perspective) audit requirements are for cost type contracts where an incurred cost submission is required annually and an audit of both direct and indirect costs is required.
Strategic FAR Advisors provides complete Federal procurement consulting solutions to help you create cost proposals that comply with proposal criteria, establish pricing and accounting compliant with FAR and will help you successfully navigate a DCAA or other Federal agency audit.
Our consultants will develop a specific approach for your company based on your industry, contract mix and strategic goals. Our approach will help you develop a coherent Federal procurement strategy and the required supporting systems that comply with FAR and CAS. We support you before, during and after audits and establish compliant solutions in areas including long range planning and budgeting, job cost accounting, pricing, timekeeping, inventory, indirect cost allocations, purchasing and billing.