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DCAA Accounting System Adequacy

By Jon Hall, CPA

One of the first audits that a startup government contractor will experience is the accounting system review. Since it is normally one of the first audits, we want to help our clients know what to expect to help make the experience less stressful.

In preparation for an accounting system review, here are some questions you should ask yourself about your accounting system:

  • Does my set of books follow Generally Accepted Accounting Principles?
  • Are my accounting records set in a cost pool structure?
  • Are my indirect costs segregated from my direct costs?
  • Are my unallowable costs segregated from both direct and indirect costs?
  • Is my timekeeping system set up in a manner that would pass an audit?
  • Are my employees ready for a timesheet floorcheck audit?
  • If I were to pull a sample of timecards, would the timecard, job cost summary, paycheck detail, and the billing invoice all agree?
  • Am I following all guidelines as explained in the Joint Travel Regulations for direct travel?
  • Are all employees following policies and procedures set by the company? It’s important to remember that company policies need to be followed as well as FAR regulations.
  • When was the last time I reviewed DCAA’s audit programs? There is a wealth of information on the DCAA website at www.dcaa.mil. These can serve as a “cheat sheet” to what you can expect in a lot of the DCAA reviews.

A good trial run would be to review the pre-award audit process in detail. I also encourage clients to do a timesheet floorcheck at least once a quarter, if not monthly. Make sure that you have your questions set as they follow your timekeeping procedures. We are always here to answer your questions. I wish you the best and hope that this helps.

Unfortunately, it is impossible to give comprehensive tax and accounting advice over the internet, no matter how well researched or written. Before relying on any information provided here, contact a tax or accounting professional to discuss your particular situation.