Dcaa Accounting & Compliance: Must For Every Business

Posted by downtownsandiego on May 15th, 2018

For companies looking for long-term customers and a more stable recurring income, DCAA (Defense Contract Audit Agency) compliance can be a real advantage.

Unfortunately, for many contractors, the guidelines of being a DCAA compliant contractor have modified hugely in the last several years. This has made it more complicated to keep DCAA compliant status.
To reduce misuse and scams, the govt is tightening up compliance guidelines and increasing penalties for companies that are not able to adhere to purchasing guidelines like those from the DCAA. Working in compliance is no longer considered a best practice: it’s now essential that can be both complicated and time-consuming.

For this reason, a DCAA audit can be a traumatic here we are at govt organizations. However, it doesn’t have to be. Many companies are there who provide govt contractors with the accounting and financial management support they need to ensure full DCAA compliance and avoid the effects of a unsuccessful audit.

Being DCAA Compliant indicates your company has in place recorded guidelines and techniques that are totally followed and meet DCAA’s specifications. It includes that your business systems are compliant with DCAA’s specifications. For example, your accounting system should be able to monitor costs independently such as oblique and immediate costs, accounting costs, payments costs, and work costs. Preferably it should be fully incorporated with your time keeping system and be able to monitor of all of the reviews that DCAA wants to see during an audit. For more information on DCAA Compliance, obtain the Deltek whitepaper “Understanding DCAA Compliance”.

What Is DCAA Compliance?

The Defense Contract Audit Agency (DCAA) provides audit and financial advisory services for government organizations like the Department of Defense. When the DCAA accounting works an audit on a govt contractor to test for compliance, they are looking at the contractor’s compliance with Federal Acquisition Regulations, also known as the FAR. This is a set of guidelines in the Federal Acquisition Regulation System from government organizations that decide the techniques as well as around the government’s purchasing of goods and services.

To be DCAA compliant indicates that a govt contractor must follow specific FAR guidelines, which must be proven using an audit. If a contractor is not in compliance with the FAR, they are not DCAA compliant and may be omitted from future govt agreements or even agreements with other govt organizations. It’s also possible that a contractor in the middle of finishing a legal contract could have their compliant status suspended, leading to their contract with the govt being nullified. For these reasons, DCAA compliance is crucial for all govt organizations, regardless of their size.

In govt acquiring, the primary accounting issue is the price. There’s a big difference between accounting performed by a commercial company and a govt contractor in terms of how the price is categorized, separated, assigned and revealed. Some of the common items being scrutinized during an audit are: Allowable costs, unallowable costs, direct costs, indirect costs, cost pools and pooling of indirect costs.

The DCAA compliance professionals and services help control costs and increase effectiveness, giving management teams more time to focus on growing their businesses while guaranteeing they have the necessary DCAA compliant accounting software, documentation and reporting to meet audit specifications.