DCAA Issues Real-Time (Labor & Material) Audit Guidance – Good News or Not so Good News?

On August 9, 2023, DCAA issued guidance to its auditors revising the real-time labor and material testing requirements. DCAA historically referred to these procedures as Mandatory Annual Audit Requirements (MAARs) 6 and 13. DCAA states in its guidance what its auditors need to know is that “[l]abor and material are two of the most significant cost elements billed under government contracts. As such, one of the primary reasons … [DCAA] audit[s] labor and material costs incurred is to determine the accuracy of the charges. The real-time verification of these costs as they are incurred provides valuable confirmation of the accuracy of the charges and can only be accomplished during the accounting period to which they apply.” I cannot really argue with this statement.

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Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support, Human Resources

DCAA Publishes the 2024 Compensation Cap

Our friendly DCAA auditors have taken up the government requirement to calculate and publish annually the new compensation cap as provided for in Section 702 of the Bipartisan Budget Act of 2013 (BBA; Pub. L. 113-67), dated December 26, 2013. The 2024 cap amount is $646,000. Below, we have provided the compensation caps going back to 2016.

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Topics: Employee & Contractor Compensation, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)

What Government Contractors Can Expect in a Purchase Existence and Consumption Audit

In August of 2023, the Defense Contract Audit Agency (DCAA) changed what is used to refer to as Mandatory Annual Audit Requirements (MAARS) 13 audits to Real-Time Audits of Purchase Existence and Consumption. This change was to eliminate the mandatory part of the requirement and introduce greater flexibility based on the auditor’s risk assessment of the contractor.

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Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support, Human Resources

What Government Contractors Can Expect in a Real-Time Labor Audit

In August of 2023, the Defense Contract Audit Agency (DCAA) changed what it called Mandatory Annual Audit Requirements (MAARS) 6 audits to Real-Time Audits of Labor. This change was to eliminate the mandatory part of the requirement and introduce greater flexibility based on the auditor’s risk assessment of the contractor.

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Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DCAA Audit Support, Human Resources

Common Mistakes in Termination Proposals for Government Contracts

The Government can terminate its contracts, in whole or in part, through special contract clauses referred to as “termination clauses.” Terminations can be frequent occurrences and can happen for numerous reasons, such as lack of funding, bid protests, changes in military strategy, technological advancement, federal operations, or national political agendas that change the government’s needs. FAR 49.201(a) [Termination of Contracts] states, “…A settlement should compensate the contractor fairly for the work done and the preparations made for the terminated portions of the contract, including a reasonable allowance for profit….” This compensation decision, unfortunately, is made through the government’s lens. A contractor must be focused on telling their story and providing proof through adequate documentation of claimed costs.

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Topics: Contracts & Subcontracts Administration, DCAA Audit Support, Federal Acquisition Regulation (FAR)

Revision to DCAA’s Mandatory Annual Audit Requirements (MAARs)

Mandatory Annual Audit Requirements (MAARs) 6 (labor) and 13 (material purchases) are two of DCAA’s mandatory annual audit requirements performed for incurred cost audits. These MAARs, established decades ago, have customarily been performed on a “real-time” basis within the year in which the costs were incurred. However, DCAA has recently revised their audit guidance in a Memorandum for Regional Directors (MRD) titled “Revised Procedures for Real-Time Audits of Labor and Purchase Existence and Consumption.”

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Topics: Compliant Accounting Infrastructure, Small Business Compliance, Government Compliance Training, DCAA Audit Support, Government Regulations

2023 Year End Unanet Accounting Checklist for Government Contractors

It’s the most wonderful time of the year! Below, we’ve created a compact list of action items for your Unanet accounting system at year end. Please don’t hesitate to call us to walk through this year end checklist with one of our consultants to help guide you.

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Topics: Compliant Accounting Infrastructure, DCAA Audit Support, Unanet

Deltek Costpoint Indirect Rate True-Up Invoicing

In government contracting, Deltek Costpoint stands out as a comprehensive enterprise resource planning (ERP) solution designed to meet the specific needs of government contractors. One crucial aspect of financial management is the indirect rate true-up process, a fundamental component of invoicing within the Deltek Costpoint system. In this blog, we will explore the intricacies of Deltek Costpoint indirect rate true-up invoicing, shedding light on its significance, the process involved, and its impact on government contractors.

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Topics: Compliant Accounting Infrastructure, DCAA Audit Support, Deltek Costpoint

How to Choose a Human Resources Management Technology Solution

If chosen carefully and skillfully, a Human Resources Management (HRM) Technology Solution can significantly improve workplace productivity, enhance compliance, and encourage employee engagement. The various acronyms (i.e., HRM, HRIS, HCM) utilized to describe HR technology solutions often create confusion. Essentially, a robust Human Resource Management system, “HRM” as we will call it, brings together human resources (full life cycle of applicant tracking through onboarding-to-termination), timekeeping, workforce management, payroll, and data analytics all under one technology solution—a comprehensive, full-suite single solution.

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Topics: DCAA Audit Support, Human Resources, HR Huddle, UKG Ready HR Software Consulting

Interest is Unallowable – How is That Possible?

FAR 31.205-20 provides that interest is unallowable on Federal Government contracts, no matter how it is calculated or presented in your financial books and records. This means you cannot propose, bill, or claim your interest expense.

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Topics: Compliant Accounting Infrastructure, DCAA Audit Support, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)