Redstone Government Consulting Blog | Compliant Accounting Infrastructure (8)

When contracting with the Federal Government on a cost reimbursement basis, the Government will need to ensure that your accounting system will support the complexity of this type of government contract. To achieve this, the U.S. Government has established various regulations and procedures to assess the accounting systems of prospective contractors. The main instrument is the SF1408: Pre-Award Survey of Prospective Contractor Accounting System. This article provides a comprehensive overview and explanation of the SF1408, its purpose, and its significance in the pre-award process.

There are many circumstances where a Unanet customer might manage multiple legal entities in the same Unanet system. There are many benefits as well:

The DCAA imposes strict requirements on government contractors when it comes to timekeeping. Make sure to utilize some of the key features in QuickBooks Time to help your business remain DCAA compliant.

While it may be tempting to change the Project Account Group (PAG) in Deltek Costpoint, revenue and billing formulas, revenue and billing formula levels, or a combination of both, you must consider the risks and consequences accompanying this decision.

2 Code of Federal Regulations (CFR) 200 lays out the Procurement Standards (i.e., purchasing system requirements) in section 317 to 327. 2 CFR 200.317 (Procurement by States) requires State Governments making purchases under Federal awards to use the same policies and procedures it uses for placing purchases when it spends State funds. 2 CFR 200.318 (General Procurement Standards) relates to non-Federal entities[1] other than State Governments. This section requires the non-Federal entity to have and use documented procurement procedures, consistent with laws and regulations and conform to the procurement standards identified in §§ 200.317 through 200.327.

DoD issued a Final Rule (DFARS Case 2021-D001) amending the DFARS to expand Contracts Eligible for Quick Closeout. The final rule is effective March 1, 2023. We believe there will be an increase in the number of DCMA requests to apply the quick closeout procedures to contracts with less than $2 million of unsettled direct and indirect cost, or if it is in the best interest of the government regardless of the dollar amount of the contract or unsettled costs. Seeing as DCAA questions less than 1% of the incurred cost it does get around to auditing. It would be in DoD’s best interest to close all completed contracts. One can only hope.

Organizations that have federal awards, whether that be grants, cooperative agreements or contracts, must comply with specific cost accounting regulations. Unfortunately, depending on the type of federal award, the regulations may not be the same. Both, both Grants or Cooperative Agreements awarded under 2 Code of Federal Regulations (CFR) 200 and Contracts awarded under 48 CFR Federal Acquisition Regulations (FAR) provide requirements for cost allowability, allocability, and reasonableness as well as the required cost accounting treatment for all cost:

Oftentimes when supporting the production of cost volumes and pricing exercises for clients, we’re given a basis of estimate (BOE) that has been written by someone on the technical team. Even being a group of accounting and compliance professionals who know little in areas such as cyber, engineering, or other technical areas of the scope of work, we’re left scratching our heads. This usually leads to several back-and-forth discussions centered around gleaning enough information from the technical team to pass the proverbial government “sniff test”.

Yes, the door just opened for potential relief from unanticipated inflation on fixed-priced contracts, but what’s beyond the door is still unclear. This year’s National Defense Authorization Act (NDAA) includes Section 822, Modification of Contracts to Provide Extraordinary Relief Due to Inflation Impacts, which builds upon DoD’s September 9, 2022, inflation guidance through use of FAR Part 50, Extraordinary Contractual Actions and the Safety Act, requests submitted to your contracting officer to provide an upward adjustment (increase contract value) and this can be done for prime and subcontractors. Note that this NDAA section does not create an obligation for the Government to pay for unanticipated inflation, but it is a “discretionary” expenditure where the Government may pay for the effects of unanticipated inflation. What remains to be seen is exactly how and how much will be provided to your contract(s).

Effective for tax years after December 31, 2021, companies that have research and development expenditures will be required to amortize their R&D costs instead of deducting them in the current year. So, what is the impact – an increased tax bill beginning in 2022.