Accounting Systems Requirements

For small businesses in federal contracting, getting the right accounting system in place is more than just the accounting software.  And it’s about more than just being able to pass a DCAA Audit.

The basic accounting requirements for DCAA Compliance are found at DCAA’s website which is DCAA.mil.  Look for a document called Information for Contractors and find the Accounting Systems Requirements Chapter.  You’ll also want to download and understand the Pre-Award Survey used by DCAA when they initially work with a small business – it’s called SF1408.  Some of the basic requirements to pass a DCAA pre-award audit are:

  • A structured chart of accounts identifying direct and indirect costs, indirect pools such as fringe, overhead and G&A, with unallowable costs segregated
  • A timesheet process for daily time reporting with audit trails, integration with the timesheet, labor costing and payroll
  • Ability to compute and apply indirect rates
  • Tracking of contract costs and cumulative amounts against contract values
  • Procedures and documentation

The right accounting system also has to include the right combinations of processes to support the infrastructure of the company, from HR to Accounting, to Contracts and Program Management, Management financial reporting, business development, proposals and pipeline management.

In a perfect world, you’d have everyone on the same system accessing the latest data, with security and access based on their roles and responsibility.  The accounting system may be the core system, because that is how employees report their time and get paid, and that is how costs are tracked against contracts and billed to customers.  But how do you also pull in other areas like pipeline management, a streamlined recruiting and onboarding process, a resume database for proposals and an integrated contacts database or CRM?

While becoming DCAA compliant is requirement to be competitive, developing company processes that can scale with your organization, eventually becoming ISO certified, is a goal for many.  Successfully creating a streamlined infrastructure is what makes small business more competitive, and more profitable, because you’ve created a profit machine that your team uses to crank opportunities into executed contracts.For more information about how to get your small business on the right track, contact me to schedule a System Assessment call.  At Solvability, we help small businesses win federal contracts.