At the end of each of the DCAA audit programs for contractor business systems, DCAA discusses what it refers to as “Less Severe Significant Deficiencies.” These are clearly deficiencies which do not meet the DFARS definition of a “Significant deficiency.”[1] As a result, the withhold requirement provided for in DFARS 252.242-7005 cannot be applied.
Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR)
As more and more companies are acquiring companies or being acquired, a predominant question that arises is can I do work with my new or existing affiliates. The simple answer is yes, but there are specific requirements in the FAR on how transactions are performed between affiliates. The requirements of intercompany transactions are found in two primary cost principles FAR 31.205-26 – Materials Costs and FAR 31.205-36 Rental Costs.
Topics: Compliant Accounting Infrastructure, DFARS Business Systems, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)
DCAA issued some guidance on PPP forgiveness treatment in the form of frequently asked questions (FAQs) to its auditors. The FAQs were not front and center on DCAA’s website but search on “PPP” did find them at: COVID FAQ for PWS 07142021 (dcaa.mil).
Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), Small Business Compliance, Contracts & Subcontracts Administration, DCAA Audit Support, Defense Procurement & Acquisition Policy (DPAP), Government Regulations, COVID-19, Paycheck Protection Program (PPP) Loans, Federal Acquisition Regulation (FAR)
DCAA has caught up on their incurred cost backlog and is concentrating effort on Truth in Negotiations Audits (i.e., Defective Pricing). The objective of the Truth in Negotiations audit is to determine whether a negotiated contract price was increased by a significant amount because a contractor did not submit or disclose current, accurate or complete cost or pricing data.
Topics: Proposal Cost Volume Development & Pricing, DFARS Business Systems, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)
This video and article discuss the importance of provisional billing rates for government contractors. If you have cost-reimbursable vouchers or progress payments based on costs, you want to make sure you have established provisional billing rates.
Topics: Compliant Accounting Infrastructure, DFARS Business Systems, DCAA Audit Support, Vlog
On July 9th, 2021, the Department of Defense (DoD)issued a final rule in the Federal Register to implement 10 U.S.C. 2330a which requires the DoD to establish a data collection system to provide certain management information about an awarded contract or task order that is valued in excess of $3 million. This new rule is applicable for the following service acquisition portfolio groups:
You may read the entire rule here.
Topics: Compliant Accounting Infrastructure, Small Business Compliance, Contracts & Subcontracts Administration, Government Compliance Training, DFARS Business Systems, DCAA Audit Support, System Award Management (SAM), Government Regulations
ASC 606, Revenue from Contracts with Customers, had an impact on the way many contractors recognized revenue related to contracts with the Federal Government. Redstone has covered this topic a couple of times (January 26, 2021 Government Contractor Challenges in 2021 Webinar and May 6, 2021 MossAdam/Redstone Webinar Compliance Changes for Government Contractors). ASC 606 also impacts the recognition of sales commissions. The overarching GAAP matching principle requires that the expense of sales be matched to the recognition of the related revenue.
Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)
In my years as a CPA and consultant I’ve worked with many small businesses that have asked for input on what they need to be doing to get more reliable financial data. Usually, it’s business owners looking for ways to be able to make important decisions faster, but lately it’s often companies new to government contracting that are trying to figure out what they need to be doing to keep clear of problems with DCAA. In either scenario, one of my first suggestions is a formal monthly close process. When I say “formal”, that doesn’t mean that it has to be cumbersome and complicated. If the business financials are relatively simple, then that close process can also be fairly simple and still be effective. But it needs to be structured, with a specific checklist in place as to the procedures that are to be performed, the order in which they are to be done, who is responsible for each task, and target deadlines for each. That recommendation then raises the next question – what do you mean by “close”?
Topics: Compliant Accounting Infrastructure, DCAA Audit Support
Northrop attempted to open up a dialog with Government as to the allowability of litigation settlement costs it planned to include in its 2019-2023 Sector Home Office Allocation Submission. Of course, Northrop believed the cost was allowable, and the Corporate Administrative Contracting Officer (CACO) believed the costs to be unallowable.
Topics: Non-US Government Contractor, Litigation Consulting Support, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)
For many contractors (truly, for any business), any event with the word “Audit” in the name has a scary connotation. And when you add DCAA to that, a contractor’s blood pressure may automatically rise. However, the best way to rock an audit is to understand what it is for and be prepared for it.
Topics: DCAA Audit Support, Vlog