Are you providing services to the DoD? If so, it’s critical to make sure your accounting system meets the strict DCAA compliance requirements.
There are many elements to achieving DCAA compliance, however, there is no such thing as ‘DCAA approved’ software, only software that might be optimized to provide the required reporting.
In order for an accounting system to be approved, it must demonstrate the ability to meet these twelve non-negotiable key elements. To achieve DCAA compliance you must meet every single requirement.
|Key Element||What it Means|
|Separate direct costs from indirect costs||>> policy describing criteria for separating the costs|
|Accumulate contract costs by cost element and by cost objective or contract||>> job costing system that is integrated with your accounting system|
|Homogenous indirect cost pools and allocation bases||>> functions must be similar and have a similar relationship to the cost objectives being managed|
|Contract costs must be controlled by the general ledger||>> accounting systems (Quickbooks or Microsoft Dynamics GP) will do this automatically|
|Demonstrate compliance with generally accepted accounting principles||>> cash-based accounting methods are not permitted|
|Pre-contract cost accounting||>> must be recorded separately|
|Timekeeping system||>> time must be tracked and tallied every day|
|Labor distribution systems||>> labor distribution report based on timekeeping software|
|Accounting for unallowable costs||>> meet the requirements of FAR 31.201-6|
|Interim accumulation of costs||>> update accounting system at least monthly|
|Track costs by contract line item||>> does not apply to all contracts|
|Limitation of cost and funds/invoicing clauses||>> does not apply to all contracts|
Getting approved by DCAA can be quite a challenge and will require time and effort, but the effort it is worth it since many of the requirements are best practices that should be in place anyway.
The most efficient way to achieve and maintain DCAA compliance is to have a team of experts review your systems and provide a clear path to compliance. You have options and Sousa & Weber, LLP will help you find the best one for your business. Learn more about Sousa & Weber’s DCAA Compliance practice.