DCAA and Its Compliance: Here?s What You Should Know

Posted by Tarun Aarya on February 16th, 2018

So, you’ve jumped over the first barricade of winning a government contract. That’s pretty cool. Now, you need to comply with DCAA. It is important to make sure you’ll not have any problems when you come to face an audit. You need to have documented policies and procedures to prove that you’re meeting the DCAA compliance.   

Let’s dig deeper and get an insight into DCAA and its compliance.

What is the DCAA?

The full form of DCAA is Defense Contract Audit Agency. It involves in reviewing your accounting practices and accounting of government contractors that include prime contractors and subcontractors. Even in case your federal contracts are Fixed Price contracts, you must follow the DCAA-compliant accounting system that supports Cost Type Contracts (Cost Plus and Time and Materials Contracts.

Common Activities of DCAA

The DCAA is responsible for accounting system reviews in order to ensure that the companies are meeting requirements of federal contracting rules. Its works include conducting pre-award surveys, financial capabilities, and floor checks and incurred costs audits.

The aim is to ensure that you’re financially strong and can perform on a contract. Besides, it also makes sure whether or not the contractors have submitted a detail of their actual indirect rates for a fiscal year compared.

What is DCAA compliance?

When the DCAA audits a government contractor or conducts a pre-award survey, they assess the compliance of the contractor with the Federal Acquisition Regulations (FAR) - the rules in the Federal Acquisition Regulation System. This system comprises a set of rules and regulations issued by agencies of the Federal government. The purpose is to govern the "acquisition process," through which the government acquires (purchases) services and goods.

During the acquisition process, the FAR makes a draft of the contractors’ requirements in order for the following reasons:

•          To sell to the government
•          Understand terms under which the government obtains ownership
•          Decide the title and control of the services or goods purchased
•          Get to know the rules on specifications
•          Set actions regarding solicitation of bids

Why is compliance important?

In case you don’t comply with the FAR, they may prevent you winning the future government contracts or teaming arrangements with other contractors. It may be possible that the DGCA stops the Contracting Officers from making payments to you. 

Thus, it’s great that you have won the government contracts. But, the greater challenge is to comply with it. It’s advisable to take help of professional accountant that can help you meet the DCAA compliance. You can find accounts at a popular accounting firm.