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.)
Katherine (Katie) Donnell serves as the Director of Unanet Practice Services at Redstone Government Consulting, Inc., where she leads the firm’s Unanet consulting practice in delivering expert implementation, optimization, and compliance support to government contractors. With extensive expertise in DCAA-compliant Unanet Time & Expense Tracking, Project Portfolio, and Financials, Katie plays a vital role in helping contractors build and maintain compliant, efficient financial and project management systems. As one of the first Unanet Certified Implementers, Katie was part of Unanet’s initial pilot certification program for non-Unanet consultants, investing over 300 hours in training, system development, and rigorous testing to obtain her certification. She holds Unanet Advanced Project Management training credentials and is also a QuickBooks ProAdvisor. Her technical expertise and real-world implementation experience make her a trusted advisor, frequently called upon by Unanet’s internal teams to support implementation projects as an external expert. Katie is also responsible for the continued growth and strategic oversight of Redstone GCI’s Unanet Practice, ensuring that quality of service, client support, and consultant development remain at the highest standard. She is committed to advancing the professional development and expertise of Redstone GCI’s Unanet consulting team, ensuring they stay at the forefront of industry best practices and evolving compliance requirements. At Redstone GCI, Katie serves as a primary point of contact for numerous small business clients, providing ongoing government cost accounting and compliance support. She regularly assists with monthly accounting close processes, ensuring accurate financial reporting for program management and executives. Her unique combination of software system expertise and compliance knowledge allows her to provide strategic, hands-on guidance to government contractors navigating complex regulatory and financial landscapes. With extensive experience in government contract accounting and compliance, Katie has assisted contractors with DCAA audit readiness, including SF1408 pre-award accounting system audits, provisional billing rate submissions, forward pricing rate development, and incurred cost submissions. She also helps clients design and implement compliant policies and procedures to support an adequate DCAA-approved accounting system. Prior to joining Redstone GCI, Katie worked in public accounting and government contracting, gaining operational experience with Unanet, QuickBooks, SpringAhead, Deltek T&E, ADP, Paychex, and QB Payroll. Her extensive background in accounting, compliance, and financial systems ensures that Redstone GCI’s Unanet clients receive the highest level of technical and regulatory expertise.