A common misconception occurs when the term “DCAA-compliant accounting system” is used to describe a particular brand of accounting software. Sure, some accounting software systems and its components are designed specifically to address compliance with government regulatory requirements. But just because you buy it and use it does not mean you automatically have a compliant accounting system. There are several requirements of the accounting system and its environment that must be in place to ensure DCAA compliance, and there are a multitude of ways to meet these requirements without a significant investment in the purchase, implementation, training, and maintenance of a really expensive accounting system. Small businesses looking forward to bidding on prime, cost-type contracts must maintain DCAA compliance while also being as cost effective as possible to keep indirect rates at a competitive level. There are many options to choose from, and business owners must determine the best fit for their company. Be sure to consider all of the options:
QuickBooks
Any notion that QuickBooks cannot be DCAA compliant is simply untrue. With the right package, proper setup, sufficient supplemental policies and procedures, and a compliant timekeeping system, QuickBooks has the ability to achieve DCAA compliance and can pass a pre-award audit. That being said, there are a few key points that need to be understood about what the accounting system must provide. The Job Cost Ledger available within QuickBooks Premier Desktop Version is a must. This is an important note, because the job cost ledger does not exist in some versions of QuickBooks, such as the online version. QuickBooks does not have a timekeeping system; therefore, it is important that the timekeeping system utilized by your company meets all of the necessary requirements. There are DCAA-compliant, web-based time and expense systems that are very cost effective, such as SpringAhead, eFAACT, and many more. These systems also have the ability to import data directly into QuickBooks using an interface designed to reduce the risk of administrative error.
Also, there are many processes that will be initiated outside of the QuickBooks system. Your company must have policies and procedures in place to govern the manner in which the costs are accounted for. There are also a multitude of journal entries that may be necessary to maintain proper cost and revenue recognition, and indirect rates must be calculated offline because QuickBooks does not calculate indirect rates. Although theses work-arounds are not ideal, it may be beneficial while company size and contract complexity are relatively low.
Unanet
In addition to a compliant time and expense system, Unanet’s project-based management software currently has the ability to be used seamlessly in conjunction with QuickBooks or Deltek. Unanet’s newest version, Version 10, is now available for general release. There are many new capabilities provided in the new release, most excitingly including the availability of a complete financials functionality that houses a general ledger with accounts receivable, accounts payable, and cost pool calculations. Unanet gives companies of any size the ability to plan resources, budget and forecast time and materials, report time and expenses, compute billing and revenue, and manage projects all while providing the controls needed to maintain a compliant cost accounting system. With the new version release, Unanet has the ability to provide a great, user-friendly project management resource that can function as a stand-alone accounting system.
Deltek Costpoint.
Deltek products are well known in the government contracting realm as the primary software solution for DCAA compliance. Costpoint is designed to maintain proper job cost accounting for complex contract requirements and has a web-based, bolt-on time and expense system called Deltek T&E. The Deltek system is built to automate proper cost and revenue recognition, so many accruals and other adjustments are calculated within the system. Deltek also has the ability to calculate indirect rates, saving administrative efforts and preventing calculation errors. Deltek has a new pricing offering for small businesses within the Costpoint Foundations release. Costpoint, being a primary accounting software consideration for most large government contractors, is now able to support small contractors with the same software now suitably priced for companies with less than 150 employees. Costpoint Foundations can easily grow with the company as they exceed that capacity, making this software package very attractive for smaller companies with large anticipated future growth. Depending on the size of your business, Deltek is now offering two SaaS options with Costpoint Foundations or Costpoint Essentials in addition to their traditional enterprise version of Costpoint.
Conclusion
When you are faced with the decision of how to support your accounting environment, it is important to remember that any software system is capable of failing an audit without the proper controls. It takes more than just an accounting system to maintain compliance. Although cost is the primary influence, it is important for business owners and business managers to be fully and correctly informed about each and every option that is available. As DCAA does fewer and fewer audits, one should think more generically in terms of having an accounting system which will pass a preaward audit (Standard Form 1408) by DCAA, and independent CPA, or an auditor assigned to a civilian agency OIG (Office of Inspector General). (Also note: DCAA does not endorse or approve software; hence, the references to DCAA compliant accounting systems does not imply formal DCAA approval or endorsement.)
Katie is the Unanet Practice Lead at Redstone Government Consulting, Inc. based in our Huntsville, Alabama office. Her areas of expertise include supporting government contract businesses with a special focus in DCAA-compliant Unanet Time and Expense Tracking, Project Portfolio and Financials. QuickBooks, and Deltek GCS. Katie is a QuickBooks ProAdvisor, Certified Unanet Systems Implementer and has completed the Unanet Advanced Project Management training. Katie was one of the first Unanet Certified Implementers and was part of the initial pilot offering to non-Unanet consultants. As part of her certification process, Katie invested over 300-hours of instruction, out of class database development time and testing to obtain her certification. Since certification, Katie has assisted numerous Redstone GCI clients with implementation and post-implementation support services. Katie is frequently called upon by Unanet to join their implementation teams as an external resource and is considered a subject matter expert in the implementation of all Unanet software offerings. In her role with Redstone Government Consulting, Inc., Katie not only provides software systems expertise, but also frequently assists clients with preparation and support of DCAA audit activities including SF1408 pre-award accounting system audits, provisional billing rate submission, development of forward pricing rates for proposals, incurred cost submission preparation and development and design of policies and procedures necessary to support an adequate (DCAA-approved) accounting system. Katie serves as the primary point of contact for many small business clients in government cost accounting/compliance and assists monthly with the close of those contractor’s accounting systems and reporting to program management and executives. Her industry experience, software systems expertise and compliance knowledge provides a rare combination of knowledge to clients looking for a consultant to become an integral part of their team. Professional Experience Prior to joining Redstone Government Consulting, Inc., Katie worked in public accounting as well as small to mid-sized government contractors. She has prior operational experience with the many types of software such as Unanet, Deltek GCS, QuickBooks, SpringAhead, Deltek T&E, ADP, Paychex, and QB Payroll. Education Katie earned a Bachelor of Science degree in Accounting from The University of Alabama in Huntsville in 2010, where she was President of Beta Alpha Psi (an honor organization for finance and accounting students and professionals). She received her Master of Business Administration (MBA) from The University of North Alabama in 2014, graduating Cum Laude. Decades of Consulting, Training and Helping Government Contractors Succeed Redstone GCI offers a variety of services for large and small government contractors including evaluation, education and training, monitoring and DCAA audit preparation. Through our consulting and training programs, government contractors develop and learn to maintain compliance processes that help them succeed by mitigating risk and maximizing profitability. Our consulting team is comprised of senior leaders from government agencies and industry executives creating balance and an informed approach to our client services. Our services span the entire government contract lifecycle from proposal assistance, accounting, audit readiness, purchasing, project controls, contract administration, system implementation through to contract closeout. We specialize in preparing contractors for growth through our deep knowledge of common pitfalls companies face as they progress from small business in CAS, DFARS Business Systems and other common gates to contractor growth. In addition to almost 30 full-time consultants we also maintain a trusted network of independent contractors and other service providers who work with our team on specialized areas like ITAR, facility security, EVMS and other areas.