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DCAA Compliance Blog
Your Source for DCAA & FAR Compliance News and Discussion
ReliAscent® LLC is the only government contract accounting firm that specializes in all aspects of government contracting compliance. From our DCAA compliant accounting services, to monthly government contract accounting for all government agency awards, contract management & administration, and financial services & planning, our goal is to ensure the success of our clients, and all small business government contractors and grantees.
In our DCAA Blog, we discuss the latest government contracting news from the Federal Government, the DCAA, and DCMA, as well as promotions offered by ReliAscent, and helpful tools and resources for contractors.
We hope you will visit and take part in the discussions on our blog on a regular basis. If you ever have any questions or would like to discuss how our experts can help, do not hesitate to contact us at any time!
Many start-up businesses and small businesses are in need of a DCAA compliant accounting system but cannot afford many of the options for software that is DCAA compliant “out of the box”. These “out of the box” solutions usually include systems like Deltek CostPoint®, Deltek First Essentials®, Sage Mass 90®, Jamis Prime®, Microsoft NAV® as modified by PVBS, Procas® and ERP-Gov® to mention a few. A small business wants a system that is not too complicated for their simple structure and yet can be affordable for their limited budget and still have the capability of passing a DCAA audit. The good news is, “Yes” a system based on software like QuickBooks® can be made compliant. Normally a QuickBooks® system cannot be compliant without the addition of what I call satellite systems. The following graphic illustrates this concept:Read More
I often hear people say they want to buy accounting software that is “DCAA Approved”. Or sometimes they say that they need an accounting system that is “DCAA Approved”. This is a bit of a misnomer. First of all, the DCAA does not “approve” software packages nor do they “approve” accounting systems. A software package may be designed to meet FAR and DCAA requirements, or as it sometimes is referred to, to be “compliant” with DCAA requirements. As we have discussed in previous blogs, there are accounting software packages out there that are designed to be compliant with DCAA requirements. There are also accounting software systems that are not designed to be compliant with DCAA requirements but they can usually be incorporated into a compliant system by adding on some external features to cover all of the compliance issues. These “external systems” usually include things like timekeeping systems, expense reporting systems, indirect rate calculation systems and complete subsidiary job cost reporting systems among others. Finally, whether the software is designed to meet DCAA requirements or not, the company employing the system must have a set of policies and procedures to support operation of the system in a uniform manner.
At ReliAscent we realize that a large number of small government contractors use QuickBooks® as their accounting system. Since QuickBooks® is not designed to meet FAR & DCAA requirements, there must be some add-ons as well as a strong system of policies & procedures in order to have a compliant system.
Many small businesses use QuickBooks® software for their accounting. QuickBooks® has been the number one selling accounting software for small business for many years. The reasons for this are many but primarily the program has been very comprehensive and easy to use for a small business owner plus you can easily afford to purchase the software and install it on almost any computer. Many small business government contractors have also used it but this requires the addition of outside applications to bring the system into full DCAA compliance.
Traditionally software was either designed to meet DCAA requirements or, if it was not, there were external engines required to make the system compliant for DCAA accounting. Most of the software designed specifically to meet the DCAA requirements was software that only larger companies could afford, like Deltek Costpoint®, Sage MAS90® and other similar systems. As the government focused on gaining more business from Small Business, these systems appeared to be a barrier for Small business to gain entry into the marketplace. For this reason other systems became popular. Deltek purchased a company and came out with a program that looked, felt and did a lot of the same things that Costpoint did but was less expensive. Deltek marketed this software for Small Business under the Deltek GCS Premier® brand. This was still fairly costly for the very small businesses. Most of these small businesses were drawn to simple and efficient software like Peachtree® and QuickBooks®. Since these programs were not designed to meet DCAA requirements, some adjustment was required to make them a part of a DCAA compliant accounting system. Usually things like a compliant timekeeping system and a system for calculating indirect billing rates and creating complete job cost reports were done outside of the accounting program. These "add ons" were necessary to complete the software system and then policies and procedures were required to make a complete system that was compliant. If the person putting together the system did not have extensive experience in government contracting, and specifically with DCAA compliant accounting systems, the chances of the system being capable of passing an audit were reduced.
The number one software for accounting for small business is usually considered to be the QuickBooks® program. This program is very flexible and very complete for setting up and operating a small business. When the small business decides that they want to participate in government contracting or they secure a government grant, the QuickBooks® software is not designed to meet the requirements set forth by the CFR, FAR and DCAA. This does not mean that the program cannot be made compliant however. Since QuickBooks® is not designed to meet government requirements, many people panic. By setting up the QuickBooks file in a specific manner and then using some secondary programs to supplement the system, the program can be made to comply with government requirements and pass government audits, such as those conducted by the Defense Contract Audit Agency (DCAA).
Government Contract Accounting - Software
Many small businesses are overwhelmed when they begin their first government contract. The ability to pass a DCAA audit for an accounting system is daunting. Many government contractors mistakenly believe that if they purchase a dcaa accounting software package that is designed to meet DCAA requirements that they are safe. Nothing is further from the truth. It is a first step to get accounting software that is designed to meet FAR and DCAA requirements but the system set up around that software, the consistent operation of that system and the retention of supportable records is also required to pass a DCAA audit. The government wants to see a full system and the compliant operation of the system to assure that they are not overcharged for the goods and services that they purchase. In addition, since they are the single largest purchasing entity in the United States, they also want to see that they get the "best deal". These seemingly simple goals have resulted in some complex regulations for Contracting Officers and also for government contractors. Today I would like to take just a brief look at the software packages that would be available to a government contractor, especially the small business, to form the backbone of their compliant business system for doing business with the Federal Government.