Essential Facts About DCAA Audit To Help You In Understanding The System

Posted by dcaa Consultant on March 25th, 2020

The term DCAA denotes the “Defense Contract Audit Agency.” It is actually the Government agency that usually executes the auditing of the contracts under the Department of Defense. Any other government agency can also bring the DCAA for providing the financial advisory as well as the accounting services to assist the audit. There are always contracts of various proportions. Some can be of billion dollars value too when it is all about ensuring that the military and the taxpayers are paying what they should pay. Their motivation comes from the primary thought of supporting the warfighters and protecting the taxpayers too. 

DCDA compliance concept

So what is this DCDA compliance that you often hear in and around? Well, the concept is commonly in use in the Government contracting industry. But do not think that the DCAA certifies any contractor to be compliant. If the DCAA tags the contractor to be compliant, it simply means that the contractor or person is following the guidelines and recommendations of the authority. It will designate that you are maintaining compliance with eh federal laws, and you have complete preparations to face the DCAA AuditThe audit abides by the rules mentioned in CAS, FAR, and GAGAS.

Being DCCA compliant

If you want to make your company compliant to DCDA, then you have to place all the policies and procedures through documentation. The documents must follow the DCDA requirements and meet them. It also means that you have successfully completed incurred cost submissionsand the company is not hiding any income or expense. Your accounting system must have methods to track the costs separately. There are indirect and direct costs, billing costs, accounting costs, and labor costs as well. There should be complete integration with the timekeeping system. Also, keep a note of all the documents that the authority might want to see and verify during the audit.

All about the audit

In every accounting standard, especially in that of the Government contract, the key aspect of accounting is the cost. The difference between the review of any commercial form and Dcaa Audit is the basic segregation of the expenses along with proper classification, reporting, and allocation. There are separate headings for allowable costs. Direct costs, unallowable fees, indirect costs. The pooling of the indirect costs and the cost pools. Every heading will be under scrutiny during the audit. Segregation is the central part of the audit process, which is very different from the conventional accounting standards. 

Get better insight

There are various types of audit options under the DCAA. It includes the pre-award, forward pricing, benefits and compensations, incurred costs, review of the contractor purchased systems, charging of the labors. Floor checks, and the special audits. Often there are specific elements in the contract owing to which you can request the contracting officer to provide you with an independent opinion on the finance. You can get hold of the manual from DCAA and go through the introduction to the DCAA. It will help you to understand its attributes further and get an explanation of its accounting standards. 

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