For many years government contractors have struggled with how to maintain a DCAA compliant accounting system. The original Contract Audit Manual was created in the Department of Defense in the 1950's. The Defense Contract Audit Agency (DCAA) was created in the 1960's. The original requirements for systems were obviously created prior to the use of computers in business. Now, certainly, the CAM and the DCAA have adopted with changing times and continue to change. That is not the point. I think that a lot of the regulations were designed for manual type systems and they have found a way to survive in the regulations. Even some of the most popular software programs for accounting for government contractors struggle with all the requirements. In addition, some of the programs are written on older platforms so the look and feel of the program is somewhat dated.
I think this means that the industry hasn't changed enough, with respect to the requirements, to justify altering the the software with a major overhaul. On the other hand, all other computer software programs are evolving rapidly and applications are popping up rapidly and changing at an accelerated pace. For instance, the use of mobile devices to access the Internet are exploding. Apps for mobile devices are now commonplace and the latest computer operating systems are heavily adopting Apps as well. So what does all this mean for DCAA Compliant Accounting Systems? I think this means we will see a change in some of the compliant systems out there. A prime example is the location of the company's general ledger software. Traditionally this software was on a server at the company location. Traditionally the industry was heavily biased towards large business and this was not a big issue for large business to maintain a software package on their IT systems. Over the last 20 to 30 years the government has made a measurable effort to push more business to small businesses. These companies cannot afford extensive IT infrastructures like large business. As a result, the use of cloud servers is now becoming very popular. With the security that these solutions can now afford, the central maintenance and the cost (many times cheaper than maintaining a local server), this can be the ideal solution for a small business to locate their accounting system software. This also can facilitate having an outsourced accounting function (usually the most cost effective way to do DCAA compliant accounting for a small business).
When you combine the cloud location of the general ledger program with other powerful technology tools, the system becomes very efficient, streamlined and cost effective. Tools like automated timekeeping systems that integrate with the general ledger program and AR/AP cloud based systems that also integrate with the general ledger program further enhance this system. Sound too good to be true? We are doing exactly this for many of our clients today. Let me know if you would like to learn more. The technological world is changing. It's important to keep up.